final K-1 on 1065

[grandmabee]

I have a final K-1 from 1065. Loss on Line 1, loss on 1231 gains and negative capital account. Business closed.

I do not do the 1065. Active partner. So I can deduct all the losses. Is there anything else to do.

My partner did have a loan to the partnership that will not be repaid. What happens to that loan?

Thanks for any help.

[jklcpa]

It seems like that final K-1 and the partnership accounting may not have been handled properly. Did the partnership provide a schedule of the partner's inside basis? Is it possible that the partner was relieve of his share of partnership debts? If that is the case, the excess of the debt relieved over his basis would be considered a deemed distribution and can be taxable gain to him.