Loss in excess of basis

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My bad.  Misread the context of the question.

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@Anthony C wrote:

losses suspended due to basis limitations, about $30k each after 2019. 

Question is, recognize that amount as a capital gain in 2020 or is this just a basis adjustment with no recognition of capital gains?

 

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If there is $30,000 of suspended Basis losses from 2018/2019, then in 2020 the first $30,000 of "ordinary income" (Box 1) will be tax free.  Not a capital gain or taxable at all.  If the business had $40,000 of income in 2020, that first raises Basis to $40,000, but then using the $30,000 of suspended losses will lower the Basis (for 2021) down to $10,000.

Does that help?  If not, can you give more details and explain why you think something would have a taxable gain?

If losses in excess of basis were deducted on 2018 and 2019 tax returns, those returns need to be amended to show the correct losses.

If distributions in excess of basis were taken in those years, that is capital gain income for those years.

EDIT: I did not see any other answers when I posted mine.