the sale can get entered in two places. on the k-1 to the extent of any ordinary income (section 751 income) reported on the sales schedule. in the k-1 sales section, you would report the 751/ordinary income as the sales price, cost 0 ordinary income = sales price. this will flow to form 4797 line 10
your broker has reported the sale on form 1099-B with either code B or E - meaning it didn't report the cost/tax basis to the IRS. the form would show the cost as what you originally paid which is no longer the correct tax basis because none on the PTO's activity was taken into a/c - simply the broker does not know what it is
so the correct tax basis for the 1099-b (not on the k-1 section because you will double up on reporting) is computed as follows
a) what you paid/purchase price - before any adjustments - should be on the sales schedule
b) less cumulative reductions to basis ( this is for the ptp activity including distributions)
sometimes the sales schedule will report cost basis which is them doing the math a) - b)
otherwise, you do the math say a) is 263 and b) is -230 = tentative cost basis 33
c) to cost basis you add the 751/ordinary income
the result is the corrected cost/tax basis fr form 1099-B/8949/schedule D
