Business & farm

@RedCab You're missing the part about the $25k no longer being your starting point.  Partnerships refer to "basis" as what you get to use when computing your final gain.  Your "basis" started at $25k.  But it changes every year, based on what is reported on the K-1.

Think about it this way:

• First, for the moment, ignoring the 2007 distribution and anything else that may have happened on your past K-1s.
• You put $25k into the partnership.  You got $4k back.  That's a very real $21k loss.  But you're telling the IRS that you lost $32k.  So that can't be right.

So the $11k losses currently on your return?  Those reduce your basis to $14k.  The losses you reported in 2007?  They reduce it further. 

To verify the final amounts on your return, do this:

1. Look at the entire partnership history from a cash standpoint.  What did you put in?  What did you get out?  That tells you what you should be paying tax on, over all filings from 2004 to 2021.
2. Then look at past filings.  How much income/loss have you already reported and paid tax on?
3. Your final return -- 2021 -- ought to plug whatever gap is left.