My LLC went away from w-2 and K-1 (salary plus distributions) for partners pay to full K-1 with periodic draws starting in 2014 through the year last year 2015, and apparently this has now caused my capital account to go into the negative after my share of partnership income and my starting capital account was measured against my total year end 2015 distributions. Specifically, my box 1 / 14 Code A income / earnings plus my basis pre-distribution is substantially less than my total cash distributions reported in box 19 code A. Long and the short of it is that on my K-1 parner's basis worksheet, I have an entry for distributions in excess of my partner basis and never had this in 10 years before.

Our LLC accountant said this might not be taxable if my prior year's distributions were less than that year's reported income / earnings from box 1 and 14, year over year, but I do not think that is the case at all.

So, my questions are (1) is the number showing on the worksheet as a distribution in excess of partner's basis taxable as a 731(a) long term capital gain (partner for 10 years) even if that number is not reported anywhere on the K-1?

(2) if it is a capital gain, what figures do I use in form 8949 or schedule d to report it (I.e. What figure is the proceeds and what is the cost);

And (3) do I have to use form 8949 at all or just schedule d?

Thanks for any help!!!