In this case. They started the partnership with $150 each. No loans and well....they did well and had a nice bank account at the end of the year. very minimal liabilities and were able to take $20000. It is not a loan. It was taken in check form. So that's why I thought that at least 20000 shoudle be taxable not just the 13199. So maybe 13199+6801=20000 which should be the taxable amount. Doing some training now. Not helpful yet.

***Revised. They just provided some additional income. So this makes the capital account not a negative and they are being taxed on 28191(new line 1 on K1) not 13199 (original line 1 on K1)...sighhhhh love tax season