Hoping to get some thoughts from those who deal with these more than me.  Most of the K-1s and partnerships I deal with are small and simple.

I have a client who is a partner of a partnership that ceased operations in 2018 and was issued a final K-1.  He did not receive anything from the partnership when it closed.

The final K-1 lists ordinary loss of $2,153 and Section 1231 Gain of $279,500.

Beginning of year basis is $491,013 + 1231 gain of $279,500 - decreased of share of liabilities of $653,478 - Loss of $2,153 = $114,882

However, the K-1 lists beginning capital account of -$162,465 + current year increases of $372,910 = $210,445.  The difference between the basis and capital is $95,563 which is also the difference between the current year increase and net loss/gain.

I know that the capital account and the basis account are not the same thing, especially since the basis account can't go below zero, but I'm wondering what the $95k would be and if it is something that would affect basis.  Since whatever his basis ends up being is going to become a capital loss to help offset the 1231 gain, the difference is substantial.  Thoughts?  Am I looking at this right?

Thanks!