That is referring to the portion of a capital gain that is to be taxed as ordinary income. That usually happens when you sell a business asset at a gain. To the extent of depreciation deducted on the asset, you have to tax that portion of the gain as ordinary income, since that is what the deprecation was deducted from over the years.
You must have a capital gain listed on your K-1 schedule so you need to determine if any of it needs to be taxed as ordinary income. The supplemental statements included with the K-1 form may address the issue.
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