section 731 is for 

recognition of gain or loss on distribution (cash or property given to a partner by the partnership)

you do not understand the difference between a loss from operations and a distribution. They are different and I won't attempt to explain the difference again.  READ MY ORIGINAL POST. 

an ordinary loss from operations is not a distribution and therefore is not subject to section 731.  If you still don't understand or disagree see a tax pro where for a fee he or she can try to explain it to you and will tell you what I've posted.   

the applicable code section for recognizing gain/loss is code section 702.