Complex sentence: When a partner receives a distribution they may not recognize gain up to their adjusted basis in the partnership and they recognize gain to the extent that the distribution exceeds their adjusted basis in the capital accounts of their partnership interest.
Split into simpler sentences: When a partner receives a distribution they may not recognize gain up to the adjusted basis of their capital account in the partnership. They recognize gain to the extent that the distribution exceeds their adjusted basis in the capital accounts of their partnership interest.