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Subject Author Date
IRS tax return-2005 jIM 04-25-2007
|--> Re: IRS tax return-2005 Paul Thomas, CP...04-26-2007
|--> Re: IRS tax return-2005 Benjamin Yazers...04-26-2007
Posted by jIM on April 25, 2007, 4:17 am
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 I just received a notice from the IRS that our 2005 form is
incorrect for two reasons.

1) I received 6500 from a tax sale of stock from Smith
Barney, yet the 1099 did not catch up with me because we
moved in Dec of 2005. (Stock Sale was July 2005, moved in
Sept, then moved again in Dec). My mistake- I forgot I sold
this stock when filing the following March.

2) Wife had some stock from former employer in HS. My wife
was 31 in 2005, this was a stock purchase from ToysRUs where
she worked when in HS/early college 14 years earlier.
Apparently she had enough stock for dividends valued at $31.
Wife had no clue she owned anything from Toys R Us. This
was ironically thru Smith Barney as well.

Both of use have contacted Smith Barney to process an address change
and see what transactions are causing the 1099's.

I have also contacted a tax attorney.

According to IRS, we owe $1700 in taxes and penalties.

The $6500 does not take into account cost basis. The cost
basis approaches $5500 on this stock. Gain is around $2000
(some LTCG, some STCG).

What forms need to be filled out... I have perused IRS
documents, comments from the peanut gallery also
appreciated. Used Turbo tax to file the taxes and
e-filed... no paper returns were ever generated.

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Posted by Phil Marti on April 26, 2007, 2:11 am
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> According to IRS, we owe $1700 in taxes and penalties.
>
> The $6500 does not take into account cost basis. The cost
> basis approaches $5500 on this stock. Gain is around $2000
> (some LTCG, some STCG).

You need Schedule D to document the basis and calculate the
taxable gain.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Paul Thomas, CPA on April 26, 2007, 2:11 am
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> I just received a notice from the IRS that our 2005 form is
> incorrect for two reasons.
>
> 1) I received 6500 from a tax sale of stock from Smith
> Barney, yet the 1099 did not catch up with me because we
> moved in Dec of 2005. (Stock Sale was July 2005, moved in
> Sept, then moved again in Dec). My mistake- I forgot I sold
> this stock when filing the following March.
>
> 2) Wife had some stock from former employer in HS. My wife
> was 31 in 2005, this was a stock purchase from ToysRUs where
> she worked when in HS/early college 14 years earlier.
> Apparently she had enough stock for dividends valued at $31.
> Wife had no clue she owned anything from Toys R Us. This
> was ironically thru Smith Barney as well.
>
> Both of use have contacted Smith Barney to process an address change
> and see what transactions are causing the 1099's.
>
> I have also contacted a tax attorney.

Probably you don't need to go to that expense. If you can't
make the changes yourself, seek out a CPA or EA (we're not
all on vacation in Tahiti) to help you.

> According to IRS, we owe $1700 in taxes and penalties.
>
> The $6500 does not take into account cost basis. The cost
> basis approaches $5500 on this stock. Gain is around $2000
> (some LTCG, some STCG).
>
> What forms need to be filled out... I have perused IRS
> documents, comments from the peanut gallery also
> appreciated. Used Turbo tax to file the taxes and
> e-filed... no paper returns were ever generated.

Schedule B, D and 1040X for starters. The additional income
might impact other forms or schedules, like Schedule A, tax
credits, etc. Anything else that changes because of the
newly reported income should be attached as well.

Don't forget the state impact of this new income.

--
Paul A. Thomas, CPA
Athens, Georgia

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Benjamin Yazersky CPA on April 26, 2007, 2:11 am
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> I just received a notice from the IRS that our 2005 form is
> incorrect for two reasons.
>
> 1) I received 6500 from a tax sale of stock from Smith
> Barney, yet the 1099 did not catch up with me because we
> moved in Dec of 2005. (Stock Sale was July 2005, moved in
> Sept, then moved again in Dec). My mistake- I forgot I sold
> this stock when filing the following March.
>
> 2) Wife had some stock from former employer in HS. My wife
> was 31 in 2005, this was a stock purchase from ToysRUs where
> she worked when in HS/early college 14 years earlier.
> Apparently she had enough stock for dividends valued at $31.
> Wife had no clue she owned anything from Toys R Us. This
> was ironically thru Smith Barney as well.
>
> Both of use have contacted Smith Barney to process an address change
> and see what transactions are causing the 1099's.
>
> I have also contacted a tax attorney.
>
> According to IRS, we owe $1700 in taxes and penalties.
>
> The $6500 does not take into account cost basis. The cost
> basis approaches $5500 on this stock. Gain is around $2000
> (some LTCG, some STCG).
>
> What forms need to be filled out... I have perused IRS
> documents, comments from the peanut gallery also
> appreciated. Used Turbo tax to file the taxes and
> e-filed... no paper returns were ever generated.

you need to file an amended return to report the stock sale
& its related basis as well as to report the omitted
dividend

and don't forget to amend your state tax returns too

no idea if turbo tax can do amended returns
but they almost certainly can't be efiled

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Frederick Lorca on April 26, 2007, 2:11 am
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> According to IRS, we owe $1700 in taxes and penalties.
>
> The $6500 does not take into account cost basis. The cost
> basis approaches $5500 on this stock. Gain is around $2000
> (some LTCG, some STCG).
>
> What forms need to be filled out... I have perused IRS
> documents, comments from the peanut gallery also
> appreciated. Used Turbo tax to file the taxes and
> e-filed... no paper returns were ever generated.

You received a CP2000 "underreporter" notice.

If you still have your 2005 copy of TurboTax loaded onto
your computer, open your 2005 tax return and enter the two
unreported stock sales into the capital gains worksheet.
TurboTax should recompute your 2005 tax using capital gains
tax rates. TurboTax also should automatically fill out a
Form 1040X. I recommend you not send the Form 1040X to IRS
but you should print out the Schedule D and the Dividends
and Long-Term Capital Gains Tax Worksheet. Prepare a short
letter acknowleding that you failed to report the two stock
sales shown on Forms 1099-B. Indicate in the letter that
you have recomputed your 2005 tax with the net gains from
the stock sales included and that the applicable amounts are
shown on the attached Schedule D and the Dividends and
Long-Term Capital Gains Tax Worksheet. Ask IRS to accept
your explanation and to assess the tax indicated in your
attachments.

Keep a copy of everything you send to IRS. Allow 60 - 90
days to hear back from IRS once you've responded. If IRS
agrees with you and closes the correspondence audit using
your figures, you don't need to do anything except pay the
additional tax. If IRS indicates that they intend to
proceed with the proposed assessment shown in the CP 2000
letter you received (about $1,700), ask the IRS Taxpayer
Advocate to get involved.

http://www.irs.gov/advocate

Frederick Lorca

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>


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