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You still allocate the loss based on the membership agreement. Basically, what that clause means is that a member's basis in a partnership cannot be less than $0. Whether a partner can deduct his loss is determined at the individual return level, not at the partnership return level.
See the instructions for Partner K-1 forms here- https://www.irs.gov/instructions/i1065sk1/ch01.html#d0e158.
You might want to check with the partners to see what their intent was there. Items of income and loss cannot be allocated "nowhere." Unless they have items of loss that they want to drop off the return (thus increasing taxable income for the partners), one or more partners may end up with negative capital.
Usually, the only way that a capital account can show a negative balance is if the partnership borrowed money. One reason that an operating agreement would specify that members' capital accounts cannot fall below zero is to ensure that partners who lent money or contributed capital disproportionately are able to benefit from the expenses covered by their capital. Also, if there is a clause in the operating agreement that says that negative capital triggers a capital call, then that might be another reason why the partners are concerned about this. One of the strengths of the partnership form is that items of income and loss don't automatically have to be allocated according to ownership interest, as long as the allocation methods that you choose have economic substance.
If I were in your position, I would read the operating agreement entirely and then check with my client for intent. No matter what the agreement says, the result for you and the taxpayer can't be a null set that prevents the completion of a return.
You can do a special allocation for that as long as the operating agreement allows it (or at least doesn't forbid it).
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