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Scenario $4$: The Ultimate Challenge $($Be Warned!$)$

A sole proprietor with an existing NOL carryforward invests in a partnership $($passive activity$)$ that uses nonrecourse debt.

The partnership is arguably a "tax shelter" with a questionable business purpose.

The taxpayer also receives income from foreign sources, with potential treaty benefits, but it's unclear which country's rules take precedence.

Throw in some depreciation recapture and a dash of potential self$-$employment tax complications for good measure.

The Task:

This isn't even about calculations at this point. Identify ALL the major tax issues, potential areas of IRS scrutiny, and the relevant code sections$/$regulations a seasoned tax professional would need to research to even BEGIN untangling this mess.