I have a sizable loss in 2012 in a LLC as a materially-active, at-risk, individual limited-partner.

My original tax basis for the partnership interest was zero in 2010,as it was granted to me and I then vested into the ownership of the shares in 2011 and 2012 (an sweat equity type vesting as an employee of the company).

My interpretation of the IRS documents is that the "adjusted" tax basis is the determining factor for the amount of loss allowed for deductions from ordinary income, not the "original" tax basis. Is that correct? Additionally, does my maturing of the vested shares in the LLC qualify for adjustment of the basis as the shares now have true value?

Any help would be appreciated.

Thanks!!