Question: I am looking for tax advice on amending a tax return for year of 2018 due to a letter received from IRS.

I received a letter from IRS stating I did not report capital gains of $232,000 from an LLC. The actual distribution was $23,000. The capital gains were not realized as the LLC had a large amount of debt. I did a simulation in Turbo Tax, which is apparently creating a large tax due.

Answer: Please note that these answers are my opinion and I would have to be able to see actual documents.  

The Turbo Tax simulation should not trigger any IRS assessments, unless the return was finalized and sent. The IRS would have other documents (1099s for example) that shows income, dividends, etc.

It would depend on the LLC. Is the LLC is a corporation, elected S-Corp status, partnership, or considered a disregarded entity. The form the capital gains/loses are reported (Form 1040 Schedule D for individuals)  would have to show the cost basis and the gain or lose.

Again I can't give a full answer without knowing a lot more information: Type of LLC, what forms were filed, etc.

This is another complex (as the IRS sees it) issues that needs further investigation.