Schedule K-1 Section L reports your capital account from the perspective of the partnership (called "inside" basis). This is NOT your adjusted basis for your own records (called "outside" basis). To calculate this, you will need to gather all the K-1s you've received since you invested in this partnership. Then complete the Partnership Basis Worksheet provided in the IRS Partner’s Instructions for Schedule K-1 (Form 1065).
In simple terms, you start with your initial investment, add/subtract income/loss allocated to you each year, and subtract any distributions you received. There are other adjustments for items that may have been reported to you on Schedule K-1. That's why the IRS provides the worksheet. The adjusted basis as of the date you sold the investment is used to calculate and gain or loss from the sale.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
