before reading below see if the partnership in the K-1 package provided you with a supplemental schedule to compute your gain or loss upon disposition
if not then
in box L on k-1 is tax basis box checked? if so, ending capital account should be $0 but that's not your basis because the partnership will make an adjustment to $0 it out since you are no longer a partner. in this case use the amount in beginning capital add capital contributed during year add current year income or subtract current year loss then subtract the amount , if any, in box 19. this is your basis for gain or loss
what if some other box is checked? , then you have some homework to do -
what you paid originally for the partnership interest (probably on 1099-B as cost)
less all tax net losses plus all tax net income (this would be items reported in part III but not necessarily all - box 14 - se earnings does not affect basis , box 16 only the actual foreign taxes would reduce basis, box 17 is only for alternative minimum tax purposes and not regular tax purposes, finally items in box 20 of which there are too many to tell you which are info items and which affect tax basis)
plus all tax net profits for same period
all amounts in box 19 reduce basis
other situations are possible. what if losses, deductions and distributions exceeded your basis
well at the point you tax basis became $0 you weren't at risk most likely and losses should have been deducted for those years or distributions might have resulted in negative basis and if that was the case some or all of those distributions should have been reported as capital gains
the basis on the 1099-B is wrong because brokers never see the K-1 and never reflect adjustments to basis for the K-1 activity. so the sale should be in the section basis not reported to IRS.
