Thanks for the worksheet. They did include a basis worksheet, but is shorter than what you sent. It shows a distribution in excess of partner basis of XXXXX. But it seems like the fact that I have not deducted the losses yet, should not work against me. If the loan wasn't included in my basis in the past, those losses would not have been allowed at the at-risk level, before they got to the passive loss level. So no income would be recognized there either, but as XXXXX of at risk carryforward. So just because they have been considered passive in the past instead of at-risk carryovers, I have to recognize this big gains? I can see basically recapture the losses that made my basis a loss disregarded the loan, if I have taken them as non-passive, but because I haven't recognized them, it doesn't seem right. Don't get me wrong, I know "doesn't seem right" means nothing. Turbotax just says this excess distribution "maybe" taxable.
I will work out your worksheet you sent and see how it comes out. All these different rules gets confusing of how they interact.
