As VolvoGirl said, with regard to taxes, the purchase and sale of the house is completely independent of the investment in the oil wells.
When reporting any distribution from the oil-well investment, are you failing to account for your cost basis in the oil-well investment? If the amount you got back (or will get back) from the oil-well investment is less than the amount you put into that investment, you have a net loss, not a taxable net gain.
