Do you mean that, if sold, the gain calculated on the Indiana partnership tax return would be less than the federal gain?  That would be correct and the gap would narrow over time. 

My question is if, for example, in year 2 there's $1k of federal income and $200k of Indiana loss (due to, in MD terms, a 'decoupling subtraction'), does that loss carry forward for Indiana purposes to offset the eventual sale (i.e. is there a separate Indiana passive loss carryforward or is the year 2 loss effectively lost)?   Am I thinking about this the wrong way?