Box 19 of the K-1 (1065) records distributions made to you, the partner or member, during the year. The distributions could have been cash or in other types of property. Think of a distribution as being similar to a dividend as they are a reduction of capital/equity in the business. If there was profit during the year, then distributions of the profit could be paid out to the members/partners. But, a difference (generally) is that you are not taxed on the value of the distributions you receive, instead you are taxed on your share of the profit/loss of the business. Thus, a business can choose to not distribute all of its profit and allow some to be reinvested back in the business, but the member/partner will be taxed on their portion of the entire profit (since the business itself was not taxed on the income as it is a flow-through entity.)
Here is more detail of what the code means for box 19 on the K-1.
Code A. Cash and marketable securities.
Code A shows the distributions the
partnership made to you of cash and certain
marketable securities.
Code B. Distribution subject to section
737. If a partner contributed section 704(c)
built-in gain property within the last 7 years
and the partnership made a distribution of
property to that partner other than the
previously contributed built-in gain property,
the partner may be required to recognize
gain under section 737. This gain is in
addition to any gain recognized under
section 731 on the distribution.
When this occurs, the partnership will
enter code B in box 19 of the contributing
partner's Schedule K-1 and attach a
statement that provides the information the
partner needs to figure the recognized gain
under section 737.
Code C. Other property. Code C shows
the partnership's adjusted basis of property
other than money immediately before the
property was distributed to you.
