Form 8986 is to report changes to the partner's share of partnership items when the partnership is audited by the IRS. In your case, since you found the error and are proactively reporting, the amended partnership return and the amended K-1s are the correct routes to take.
Per the IRS:
Who Should Prepare Form 8986
The following persons or entities should prepare Form 8986.
Audited partnerships that have made an election under section 6226.
Direct or indirect pass-through partners that receive a Form 8986 related to an audited partnership if they choose to furnish statements to their partners to further push out the adjustments.
Partnerships that file an AAR under section 6227 and either elect to push out the resulting adjustments to their partners or have adjustments that do not result in an IU.
Direct or indirect pass-through partners that receive a Form 8986 related to an AAR partnership, if the direct or indirect pass-through partner chooses to furnish statements to its partners to further push out adjustments or have adjustments that do not result in an IU.
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