I just received a Final K-1 (1065) for a client. Twenty years ago, 5 partners inherited land (DOD value was 200K) that they contributed to form a partnership (20% each = 40K). So, they were all equal partners and they had the same initial basis. The land was sold in 2022 for a total of 3.25M, my client received 650K (his 20%), and partnership liquidated. 

Line L on his Schedule K-1 (Form 1065): Beginning Capital = 150K

Current year net income = 550K .  Distributions <650K>  Ending capital = 50K.

The only other figures on the K1 are Box 10 (section 1231 gain) = 550K and Box 19 (distrib) = 650K. 

The CPA that completed the partnership return said my client's inside basis can be found on Line L of the K1 and that would carry to his outside basis calculations.  And he should be able to recognize a loss for any remaining basis after the liquidating distribution. 

So, would his basis be 150K?  He reports an ordinary gain of 550K (per the K-1) and then reports a capital loss of 50K (the amount of capital left after the liquidation is complete)?  His capital account includes his initial basis of 40K, correct?  Am I overthinking this?