Stock Audit by IRS?

Question

I filled out a 1040EZ form for my 2005 income taxes. I forgot to include one of my stock accounts (I have 3), and now the IRS is claiming that I have to pay taxes on the entire amount of a stock sale (to include the principle; not just the gains). Is this right? On my other stock accounts, I was only taxed on my profits. Is there any way to correct this? Also, I don't have a 1099 form. Is there any way to get another one?

Correction; it was a 1040A form for that year. Also, shouldn't I also have only been taxed on the profits? If so, how do I establish that most of the money that they are taxing me on is principle?

Answer 1

first of all you cant file a 1040ez with stock sales. Thats what got you in trouble to begin with. Principle is what you paid in to start with (minus any commission fees) they only tax the gains. You have to show what you paid when you paid it and when you sold it. This year do it right and file a 1040a. But you have to fix last year before you can file this year.

ok 1040a is more like it. I don't understand why they would make you pay for the principle as well unless its from an espp (employee purchase plan) gift from someone but it is taxable on the GAINS from the stock sale. I would seriouslky question this ruling with this section.

http://www.irs.gov/faqs/faq-kw187.html

Answer 2

The reason the IRS is writing you saying you owe on the entire proceeds of the sale is that the IRS has received the 1099-B showing the proceeds, but they have no record of the purchase price. It isn't necessary for you to have the 1099-B. The IRS has received the 1099-B and that is what triggered this letter. The 1099-B information is already included in the IRS letter, so use that.

Read the letter you have been sent. It likely tells you not to file an amended return. It has a response form. Check that you do not agree with some of the changes. Attach a printout of a 1040X, with a completed Schedule D showing the missing transactions, maybe you want to highlight them. If you can, attach statements of your stock accounts to show the sales proceeds of the missing transactions highlighted. This documentation should suffice to prove what you owe.

You should be able to get a statement of your account from your broker.

Then, send in your payment with all of this ASAP. Keep copies of everything.

If you received different instructions or have questions, there is a toll-free number in the heading of the letter.

Answer 3

The losses in 2008 will by no skill impression your 2007 tax due. you nevertheless owe $2800. Your 2008 taxable earnings will be decreased by using $2500 assuming you truly bought the inventory in question. all of us have unrealized losses simply by undergo marketplace, yet you in trouble-free words have truly losses in case you probably did promote your inventory.