Yes. Distributions aren't particularly relevant. When you get a K1 from a pass-through entity, its income/ loss is passed through to your personal 1040. Distributions decrease your overall basis in the investment, but don't factor into the amount of income/ loss which is passed through. If a K1 reported $100k in Box 1, for instance, you would report $100k in income even if you received $0 in distributions. Conversely, if you received $100k in distributions in a year with $0 in income, the distribution would still not be taxed (unless distribution exceeded basis, which is not common).
A large net Section 1231 gain would be taxed in the current year as a long term capital gain on Schedule D.
