Audit Irs
March 2nd, 2009
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Question: receiving an IRS audit about stock sales?
I received an IRS letter about how stock sales were reported to them and I never filed it on my return in 2007. I just didn’t send it in because I had $30,000 in losses as a result of buying and selling stocks usually held less than a month. I am going to send them information about my losses as they requested. Since I had a big loss will I more likely owe the IRS money or get a refund or will nothing much change?
Answer: So, you got the dreaded CP2000 letter.
This is usually fixable. (Unless you got the letter months ago, do NOT do a 1040X, this just slows this down.)
Get your records showing where you both bought the stock and where you sold it.
Verify that none of these are wash sales (a wash sale is when sold the stock, but repurchased it with 30 days before or after the sale). If you have a wash sale, that loss is postponed until you finally sell the stock for good.
Then fill out the schedule D and D-1 (this is the continuation form).
Fill out the page of the CP2000 that says you don’t agree.
Send it and some to purchase records via fax to the fax number at the top of the CP2000 letter.
If you can show these are all losses, then you won’t owe anything (even if it’s a wash sale, it won’t show a gain). You might even end up with a refund.
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