It would be best to report the distributions in box 19 on the K-1 schedule, but that will not make it taxable when the partners enter the K-1 form on their tax return. However, it would alert them and the IRS to the fact that there was a distribution so it can be accounted for.
Usually, there is a form 1099-B issued to report investment sales and that would be used to report the investment sale on the recipient's personal tax return. However, you are not required to issue one since you are not a broker.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
