This advice is right and guided me to the correct way of calculating basis, which is in the IRS pub Partner's Instructions for Schedule K-1 (Form 1065). It is important to track the CHANGES in non-recourse liabilities, as well as the non-recourse liability itself, as the author GeoffreyG. states. This is seen by using the worksheet in the pub. The info for entering the LT gain (if you have one) is correct.
