The liabilities provided tax basis in order for the allocation(s) to meet the substantial economic effect test, and as such, provided outside debt basis (tax basis).
You have effectively "taken the distribution" by adjusting your tax basis as noted in my original reply (basis going from a positive to a negative in bullet 2 above).
Based on the facts provided, the initial response makes sense.
My response, as noted, is based on the limited details. The response could change depending on what is flowing through other increase/decrease line. But as noted, we have no way of knowing.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
