All money returned that was reported in the total GROSS income amount on the Sch C go in the returns/allowance line. If the K-1 form you get includes the money that you eventually refunded then use the K-1 amount as gross and employ the refund/allowance category.
If you did NOT add it into income then you have nothing to deduct against ... so it really depends on your bookkeeping system and how you are accounting for the income and refunds.
