included in the k pkg. is a " sales worksheet which contains the adjustments to basis ( which includes the ordinary losses, distributions & minor other items) Also included is the amount of ordinary gain. There are instructions re: how to arrive at the total gain on the sale and a statement that "suspended losses" can be recognized.
My question is this: why does the a"adjustments to basis" include the cumulative ordinary losses-- which are claimed as "suspended losses" I will achieve the same taxable situation if I do not include said item in the "adjustments to basis" and do not claim the passive loss
You have to include them. You have received distributions in previous years without paying tax on them. Those adjustments 'balance everything out' related to your deferred tax liability from previous years.
Just to add further to my answer above -what if the carryover losses exceed the ordinary income from the sale. Would you want to use them against the cap gain or offset some other ordinary income (ie. wages, pension income, etc)?
What he's saying is why include the losses in the basis adjustment since they will "wash" with what goes on Form 4797 and the net result is the same. I guess the answer is bacause they would have to adjust the ordinary income to make things balance out and that would confuse the issue even more.