I have a situation that member 1 bought member 2 of the LLC. I am showing capital contribution for member 1 and increasing his % and withdraw for the member 2 who is selling his interest on K-1 for form 1065. This is resulting into negative ending capital balance for member 2.
How do I make ending balance to zero for member 2 as he is no longer partner of this LLC.

Thanks in advance for the help.

How do I make ending balance to zero for member 2 as he is no longer partner of this LLC.========>>>>>>>>> You should look to the partnership agreement for guidance on how to deal with this Most partnership agreements include a provision requiring partners with negative capital accounts to make sufficient contributions to zero them out on liquidation. On the up side, since member 2 had no basis in the llc when it passed a loss on to him -and which we should assume was not deducted on 2’s personal return because he had no basis ; that loss would be suspended until a year in which he does have basis. His contribution then to get him to zero should qualify as basis and he should get to deduct that contribution.
BUT, partnership and pass-through taxation is without question the MOST complicated, complex and convoluted part of the tax code. Most EAs / tax oriented CPAs should be able to tell you exactly where you are and what you can and should do, but they will likely want to read the partnership agreement and review Partner 2's tax returns. If you dissolve your llc, you will need to zero out the balance sheet on your final tax return. This indicates that you are closing the business and intend to pay whatever tax is due. When transferring the llc, partnership, you may not follow the same rules regarding zeroing out the balance sheet. If you are dissolving one partnership and beginning another, you don't have to zero out the old partnership's balance sheet if you don't want to. Instead, you can list the terminating balance on the old partnership's balance sheet and list the same balance as the beginning balance on the new partnership so that the IRS and your investors are both aware of what money was carried over from the old partnership to the new partnership.