I will try to explain what is going on.   

K-1 form that my client received as a limited partner reports (I did not prepare the K-1 form; I am simply working off of that which another firm prepared for the LLC):

line 9c/unrecapture 1250 gain:  93,374.00

line 10: Net Section 1231 gain:  195,636.

Client has $87,353 of short term carryover loss from prior year, and $11,364 long term carryover loss. 

Form 4797/Part 1 sales or exchanges of property used in trade or business more than 1 year, has a gain figure of $199,629; flowing to it, and that says on form "From k-1."   I assume this is flowing from the 195,636 of 1231 gain (not sure why it bumps up to $199,629).

This gain, $199,629 flows to Schedule D, line 11 and becomes part of overall long term capital gain. 

The -11,364 of long term capital carryover loss, mentioned above, gets subtracted, so line 15, Schedule D is $188,353 (there are $256 of other capital gain distributions) included.  

So far so, good. 

Line 7 of Schedule D, shows the total net short term loss being -87,351.  Basically, all of the short term capital loss carryover, with some other short term loss. 

LIne 16 of Schedule D, which reconciles short term loss and long term loss, reports total long term gain of $101,002.  

Thus, nowhere on Schedule D, has the $93,374 of Section 1250 unrecaptured gain been accounted for. 

In addition, and this is critical, if I go to line 19 of Schedule D, there is a link to "Unrecpatured Section 1250 Gain Worksheet.  when I go to that worksheet, the Section 1250 unrecaptured gain from the K-1 form is there (although slightly higher number), and lines 15 and lines 16 of that worksheet are taking the long term carryover loss and the short term carryover loss mentioend above, and adding the together, and they are cancelling out the unrecaptured gain.  So, line 18, of the unrecpatured gain worksheet, says that the unrecpatured Section 1250 gain is zero. 

I don't understand this, and this does not seem right.   How can there bee unrecaptured 1250 gain of $95,000, and the long and short term capital loss get applied to that to cancel out that 1250 gain to zero. 

And at the same time, back on Schedule D, those long and short term carryover losses are applied in full, again to reduce the Section 1230 gain from 199k down to basically 100k.   Is the program working correctly here.  Seems like the carryover losses are being counted twice?    Please help.   what am i doing wrong.