From K1 income, taxed on initial capital contribution?

[JTL]

I had capital contribution to a S corp few years back, thus being a limited partner in the company, but only until recently the business was sold for a small margin of profit and my initial capital invested was returned for the most part through distribution. However, I received a K-1 this year where business income (box1) was nearly the same as my distribution from selling the business. But the distribution (seems like) includes most of my initial capital contribution. Am I liable to be taxed on my initial capital contribution?  For example, initial capital invested was $20K since business started.  I had received no distributions until now when business is sold.  Distribution in my K-1 is a little more than $20K (I assume my marginal profit gained from sale of the business), but business income is about $20K on the K-1 (box1).  Am I to pay tax on my initial capital investment on top of the small profit gain?

[NCperson]

the K-1 is reporting the profit and loss of the enterprise.
 
If you invested $20k and the business is now liquidated, sounds like you have a capital loss of $20k that is reportable on Schedule D.   Do you have documented evidence that the business is worthless to prove that the sales price is zero against a cost basis of $20k? 

Edit: since you state the business is sold, that is the evidence required to indicate your selling price

[JTL]

The business will be completely liquidated by this year, to which I will receive a final K-1 next year for 2019 filing.  However, the sale of the business was completed last year 2018, and as much as I know the distributed amount as shown on my K-1 reflects the amount I initially invested+small profit margin.  Basically, the distribution amount box is almost the same as the business income box1 in my K-1.  That's why I am not sure if the amount I received in return for the sale of the business, which essentially includes my initial capital, is all taxed.  I am still confused by this.

[NCperson]

Capital is not taxed

What box are you referring to as the “distribution amount box”? Section L???

[JTL]

That would be box 19 for Distribution.

[NCperson]

please review this link which explains how the various line items of the K-1 map to Form 1040 (look at page 2). or its various schedules.  You'll find that Turbo Tax using this same mapping.  Note that Line 19 does not map to Form 1040 so that is not being taxed.  

https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf

does this help?

[sbeards]

I sold all positions in 2019 through my brokerage account. The K-1 includes a 2019 Sales Schedule that reflects those sales. After entering these figures into TT, I see TT treats the sale as a Sale of Business Property, reflecting the total shown on the K-1 schedule mentioned from column 7 "Gain Subject to Recapture as Ordinary Income". Is TT treating this correctly as a Sale of Business Property?