1099-S Problem

As far as I understand the issue, the 1099-S came from the buyer of the real estate transaction that the partnership was involved in and as required by IRS code, they needed to report that transaction to the IRS and consequently to you.  The partnership also needed to recognize that transaction and reflected it on the K-1 that they filed with the IRS and consequently with you.  As long as you are recognizing the income from the K-1, you should be able to save the 1099-S with your work papers for your reference only.  

Since this 1099-S has your name on it, you should report the sale with a basis of the same amount, to avoid an IRS letter. 

This is how you would do that in TurboTax:

1. Select Federal from the left side menu.
2. Select Wages & Income.
3. Scroll down and look for Investments and Savings.
4. Expand the section and find Stocks, Mutual Funds, Bonds, Other and click on Start or Update to the right. 
5. Click + Add investments at the bottom. 
6. Click Continue.
7. Scroll to the bottom and click Enter a different way.
8. Select Other (1099-S), and click Continue.
9. Enter a description and click Continue.
10. Fill in your information about the sale.
11. Use the amount from box 2 as your proceeds and enter the same amount as your basis. Do not enter any sales expenses.

This will show the sale on Schedule D with no gain or loss.