If your K-1, has the box in the top right checked that indicates Final year return then your partnership interest is considered 'sold or disposed.'
If that's not the case, then it sounds like something may have been entered incorrectly and because of all the situations accounted for on the K-1, it can be difficult to change some answers. Therefore, it can be best to re-enter your K-1 and delete the problematic entry. To do so:
- Open your return
- Select the Federal Taxes tab and then click the Wages & Income tab below it (Click I'll choose what I work on)
- Scroll down to the Business Investment and Estate/Trust Income section
- Click Revisit/Update next to Schedule K-1
- Next you'll see your K-1 entries listed. Click the bottom left button to Add another K-1. When completed, you'll arrive back at this summary screen. Click Delete to the right of the K-1 listed and the Edit option, to remove the incorrect/extra entry.
If that does not solve your issue, than there could be items reported in Part III of your K-1 that actually indicate that there was a disposal. In this case, you might have more information in an attached statement or may need to check with the business that issued you the K-1. However, often re-entering a form carefully, can fix issues.
