sjrcpa
Level 15

The sale was outside the partnership so does not get reported by the partnership nor on K-1s.

However, you may like to footnote the transaction on B's K-1. B's ending capital account should be zero and his K-1 gets marked Final. 

C's capital account will increase by the amount of B's ending capital account immediately before the transaction. C's outside basis is what he paid B for the partnership interest.


The more I know the more I don’t know.