dcrshell
New Member

LLC loan payoff that creates a distribution in excess of partner basis on a passive activity.

I have had an LLC interest for years that has given me passive losses in the past. I have had a positive basis as of 1-1-21due to a recourse loan of amount that was more than the passive losses accumulated through then. In 2021 they paid the loan back to me which created a distribution in excess of partner basis. Does the loan payoff cause taxable income even though the previous losses were passive losses that haven't been recognized?