"There is no distribution."

Exactly. I was trying to get clarity on how this was worded vs reality.

"The partnership interest is worth -0- now and in fact no longer exists."

Yes, that sometimes happens.

"Taxpayer must have had a self-directed IRA that allowed for investment in a partnership."

Or it was within the new company's plan. That's what I was trying to learn.

"When a nonpublicly traded IRA investment goes belly up, the IRA custodian reports it as a distribution at the last known amount - usually cost. I don't know why."

People don't realize you can't report losses from IRA accounts and there is no "gain/loss" process. It's income, or nothing. All of a sudden, people are investing in BitCoin and income-sheltered annuities inside of their IRA, and then they wonder why they can't afford to retire.