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Old 06-01-2016, 07:29 PM
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Join Date: Jun 2016
Posts: 1
CP2000 for 2014 help

We forgot to declare a small stock sale and long term capital gain on our 2014 taxes so just received a CP2000 and proposed amount due in additional taxes. Which I hear is very common.

I understand that the IRS does not have information regarding the cost basis so this proposed amount is higher than the actual amount we owe...but my questions are:

- How do I best determine how much we actually owe?
- Do I have to determine that when I send them the response or just send them the associated 1099-B with a letter and wait for them to tell me how much I actually owe?
- Do I have to fill out the entire Schedule D and 8949 (worksheet is very complicated and difficult to navigate)?
- Do I need to file an amended tax return to achieve this even though it explicitly says I don't on the CP2000?

Here is some general (rounded) information.

1099-B
Acquired 1/2010 Sold 3/2014
Proceeds $7,000
Cost Basis $5000
Gain $2000

Corrected taxable income (including this gain) $365,000

My tax program says I owe $500 when I plug all this into an amended return...is that possible for such a small gain?! I though long term capital gains were taxed at 20% maximum or closer to $400...

Thanks!



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Old 06-02-2016, 06:26 PM
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Join Date: Oct 2010
Posts: 5,236
I understand that the IRS does not have information regarding the cost basis so this proposed amount is higher than the actual amount we owe...but my questions are:======>> A IRS CP2000 is a notice that the IRS sends when the information they have on file for your income, credits and deductions is different from what you may have put on your tax return. A CP-2000 asks that you review what you filed and determine if it is all correct. You have the option to agree, partially agree, or disagree with the information the IRS has on file for you.

- How do I best determine how much we actually owe? =============>>>>> If you are in a lower income tax bracket, you may not owe any tax on your long-term capital gain.For taxpayers,on your ltcg, the rate is 0% if you're in the 10% or 15% marginal income tax brackets;15% if you're in the 25%, 28%, 33%, or 35% marginal income tax brackets; 20% if you're in the 39.6% top bracket
you need to calculates your capital gains on Sch D of 1040. On page 2 of Schedule D, TaxAct selects the check box for the worksheet the program uses to calculate your capital gains tax. Click where indicated to access the calculation worksheet.
Your tax on Form 1040, line 44, includes the total of your ordinary income tax and capital gains tax


- Do I have to determine that when I send them the response or just send them the associated 1099-B with a letter and wait for them to tell me how much I actually owe?=========>>

1.
- Do I have to fill out the entire Schedule D and 8949 (worksheet is very complicated and difficult to navigate)?=========>es; as you did not report your LTCG/STCG then you need to file SCh D of 1040/ form 8949 Short-term capital gains or losses (assets held for one year or less) are now reported on Part I of Form 8949.
Long-term capital gains or losses (assets held for more than one year) are now reported on Part II of Form 8949

- Do I need to file an amended tax return to achieve this even though it explicitly says I don't on the CP2000?=======>>>>yes;basically, as you can see, since you forgot to include some income opn your LTCG or STCG, you need to to amend your return by filing a Form 1040X

Here is some general (rounded) information.

1099-B
Acquired 1/2010 Sold 3/2014
Proceeds $7,000
Cost Basis $5000
Gain $2000

Corrected taxable income (including this gain) $365,000===== as a MFJ filer if your AGI is over $457,601 or higher than then you must [pay 39.6% on your $2K of LTCG.

My tax program says I owe $500 when I plug all this into an amended return...is that possible for such a small gain?! I though long term capital gains were taxed at 20% maximum or closer to $400...====>As said it depends on your AGI level; if you are sure iof your tax rate of 20% then your tax ability ?d be $400; $2K *20% so you need to double check it only you know your AGI and tax rate on your lTCG



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