If the partnership is a disregarded entity, you, most likely, report the business profit or loss on Schedule C. Alternatively, you report the capital loss on form 8949 and Schedule D. However, since it's a partnership, that will be filing form 1065, Schedule E may be more appropriate.
For more info, see a similar question at:
https://ttlc.intuit.com/questions/3399983-tax-issues-regarding-flipping-of-a-house
And references at:
https://www.hrblock.com/tax-center/income/real-estate/flipping-houses-taxes/
https://fitsmallbusiness.com/taxes-on-flipping-houses/ https://www.lendinghome.com/blog/how-to-maximize-house-flipping-tax-benefits/
After determining how to treat the loss, the partnership will have to file a partnership return (form 1065) and issue form K-1 to each partner.
