Dave,
Thanks for your response. Much appreciated. I would like to clarify something with you. I had three different partnerships get sold last year. Two were full liquidations and one was the item we just discussed. On none of the K1s does it spell out capital gains in terms of purchase price, sale price, tax basis, etc. It appears I'm expected to derive this information.
For example, with the K1 we are discussing now, yes, I definitely had a gain in that they made a distribution that was well above the capital I initially invested--and it was the result of selling the property. But it is just categorized as part of the distributions. It isn't earmarked as a capital gain specifically. I think I'm supposed to somehow calculate the gain (which is separate than other distibutions that were just cash flow payments as rent came in each quarter).
On a separate note, in researching how to account for capital gains in partnerships that issue K1s, I've found that some advocate simply reporting one's basis as the information included in section L "ending capital account" of the K1. I wonder if you have thoughts on this. Related to this, can one's basis be less than 0 for tax purposes? My ending capital account on the item we discussed previosly is less than zero. But I have read that for capital gain purposes one's basis should never be less than zero.
Finally, this is the first time I've had any partnerships make a sale. So sorry if my questions aren't very clear. Trying to get my mind around this.
