Thank you @Rick19744 @nexchap and please keep in mind my questions aren't meant to be argumentative, they're just an attempt to sort out my confusion on the topic!
Ok, I think I'm seeing it now.
At the time of the 2007 distribution ( on which I paid ordinary income tax) the capital account had been reduced from my original $25K to $15K. Now in the Final K-1 I'm getting $4K back. So the total loss that will come off my 2021 taxes is $11K (= $15K minus $4K). I suppose benefit to me is it's coming off against ordinary income and not against capital gain.
Someone stated that the cumulative losses couldn't be more than the original investment. Is that really true? If the LLC made money and retained it for awhile, couldn't it eventually been lost and passed on to the LLC? Or are we saying that an LLC can never really retain money without considering it income... whatever is retained is pro-rated to the investors as income and taxed?
