your tax basis is what you paid originally + all the income reduced by all the losses and deductions over the years and reduced by any distributions. upon sale there is IRC 751 recapture which is treated as ordinary income and increases your tax basis. if you sell, your capital gain is the difference between the selling price and your tax basis.
a return of capital check should reduce your basis
example
paid $8000 in 2015
income $1000 per year 2015-2022 8 years or $8000 total
basis is now $16000
distributions $350 per year 8 years or $2800
basis is now $13200
say return of capital check $5000
basis is now $8200
IRC 751 recapture $1800
basis is now $10,000
sell for $12000, capital gain $2000
lets see if this makes sense
paid $8000
basis increased by income and 751 gain $9800 total $17,800
got $2800 in regular distributions
got ROC $5000
sold $12,000
total money you got $19800 which is $2000 more than your basis'
another way to look at this is you got $19,800 for what you paid $8000 for or income of $11800
