In this paper, the concepts related to loss partitioning among the phase currents in three-phase distribution systems are revisited in the light of new findings identified by the authors. In particular, the presence of a paradox in the classical loss partitioning approach, based on the use of the phase-by-phase difference between the input and output complex power, is highlighted. The conditions for performing effective loss partitioning without the occurrence of the paradox are thus established. The corresponding results are then used to extend the branch current decomposition loss allocation method for enabling its application to three-phase unbalanced distribution systems with distributed generation. Several numerical examples on a three-phase line with grounded neutral and on the modified IEEE 13-node test system are provided to assist the illustration and discussion of the novel conceptual framework.