Donedealer, I can't find a post I made much earlier this morning, but I read a post by Rock n Rent at Investor Village and he confirms that the limited partner's share of N/R debt is includible in the partner's basis and avaliable to offset further cash distributions. So I stand corrected. Rock said that there is a requirement to track suspended losses if one includes N/R debt for basis, and there are some tricky consequences upon disposition of the MLP interest.
Thank you Liza for pointing out the Rock Rent post.
Donedealer, reading the narative of others who cite applicable authority enables me to read the same authority myself. Otherwise I'd be taking a stab at reading hundreds of pages of regulations.
And don't worry about me, I live quite well off of interest and dividends.
I think I learned the most out of this whole process. With the yahoo message thread format for this company, it is very difficult to see if one has read every posting.
Ideally, someone should sumerise the consensus conclusions of this thread, but I think the anger and annoyance level is so high that such action is probably unthinkable.
But here goes: N/R debt is includible in basis, but with resulting filing complications.
Distributions in excess of basis are taxed and capital gains, not ordinary income.
Suspended losses do not reduce a limited partner's tax basis. They can only be applied against current and future allocations of ordinary income. Possibly these losses are deductible upon disposition, but it would be a wash since basis would be reduced and gain would be larger. I'm not so clear about this matter. Was there anything else?