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Old 03-13-2015, 04:47 PM   #21
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Originally Posted by Fermion View Post
I am going to report the sale even though I agree that it is likely the IRS currently has no information on it.

I am going to treat it as a long term capital gain......

I guess I still could get dinged if they force me to change the treatment from LTCG to ordinary income in an audit. Worth the risk to save $1600 IMO. What would my penalty be? 25% of $1600 plus interest? That is if I lost the appeal.
That is what I would do.
Its not clear so any difference is an interpretation difference or opinion difference, my experience has been they either accept your view, or they tell you why in a discussion, and just want you to correct the return and make the adjustment payment/refund.
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Old 03-13-2015, 04:54 PM   #22
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Originally Posted by Walt34 View Post
There is to my knowledge no penalty for mistakenly misclassifying income but there most certainly is for tax evasion.
Well, technically, if you classify income incorrectly and that results in an underpayment you will be subject to a penalty and interest. OTOH, if you do not report income at all, the IRS treats that much more seriously, in some cases as a criminal offense, meaning jail in addition to penalties and interest.
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Old 03-17-2015, 04:02 PM   #23
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In my book, no 1099 means I'm not reporting it at all.
This is why the US has brought in the new FATCA laws, because too many folks are not reporting foreign income. All the tax software I've seen ask the questions, "Did you have any foreign income?", and "Did you have signature authority over any foreign bank or brokerage accounts".

Answering "No" when it should have been "Yes" is willful tax evasion.
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Old 03-17-2015, 04:07 PM   #24
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Well, technically, if you classify income incorrectly and that results in an underpayment you will be subject to a penalty and interest. OTOH, if you do not report income at all, the IRS treats that much more seriously, in some cases as a criminal offense, meaning jail in addition to penalties and interest.
Agreed.

For a number of years I reported my foreign pension on the wrong line of my 1040, but this year I finally reported it on the correct line. It makes no difference to the tax paid so I haven't filed amended returns.
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