The first question is what type of K-1 did you receive?
Is it a Form 1065 - Schedule K-1 or a Form 1120S -Schedule K-1?
If you have a deductible Capital Loss it won't actually come from your K-1.
As you may know, you are required to keep track of your tax basis in the Partnership or S-Corp starting with you original investment in the Company.
Your record-keeping apart from the entity's books & records would look something like this.
Beginning Investment $ 25,000.
Ordinary Income on K-1 10,000. (You included this income in your tax returns)
Less Cash Distributions - 7,500.
Adjusted Tax Basis $27,500.
So, if that was your ending investment balance & you didn't receive any payments for you interest upon withdrawal from the partnership, you would have a long-term capital loss on your tax return.
If, for example, given the example of $27,500. above & upon termination you received a cash distribution of $20,000., you would have a long-term capital loss of $7,500.
If, for example, given the example of $27,500. above & upon termination you received a cash distribution of
$30,000., you would have a long-term capital gain of $2,500.