A section 704 is a partner's distirbutive share adjustment.
Assuming you are NOT a financial institution AND this was from an adjustment to Fannie Mae or Freddie Mac investments, you report this on Line 5 or LIne 12 of Schedule D (Depending on long term or short term)
If this is a recovery of a "tax benefit", the item goes on Form 1040 Line 21
There are about 10 other possibilities. You should check the instructions to the K-1 found on the IRS website, here:
http://www.irs.gov/pub/irs-pdf/i1065sk1.pdf See Page 7-8