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@rona11 Assuming you sell at exactly the same price you bought:

- Your distributions will lower your basis, so you'll report capital gain on that amount, effectively turning dividends into cap gains.  The recapture has nothing to do with those.

- You'll typically have losses reported in box 1.  Those losses are suspended until you sell, but when you do they'll show up on Sched E and lower your Ordinary Income / Wages.  They also lower your basis.  So $100 in losses gives you $100 in Cap Gains profit, and $100 in Ord Income losses:  a tax arbitrage that works to your advantage.

- Without getting deep into the detail, good tax lawyers figured out that you could play with those box 1 "losses" to take advantage of that arbitrage.  So at time of sale, the IRS requires special handling to determine how much of that basis write-down you're doing should really get Cap Gain treatment, and how much is stuff that ought to be at the same rates your Sched E deductions are getting.  That's the 'Recapture' (depreciation is one of the big items that is in play here).  So recapture gets compared to whatever suspended losses you have, and gives you a sense of whether the partnership was actually losing money each year, or was just creating losses.

In the end, you wind up with Sched E losses and Form 4797 gains that are both taxed at Ord Rates, and 1099-B Cap Gains/Losses that get Cap Gain treatment.