lucky penny
Full time employment: Posting here.
- Joined
- Jan 23, 2010
- Messages
- 735
I just received a pretty unsettling letter from the IRS about my 2019 return telling me I owe more than $27,000. Yikes!
The discrepancy relates to 2 TIPS I had purchased for $25K each & at maturity totaled around $57K. The IRS letter refers to these as "securities" that were "sold or disposed of" and seems to say that since the proceeds ($57K) were reported to them with no cost basis indicated, they considered the cost basis to be zero; ergo, I owe $27K in taxes, penalties & interest. If I disagree, they say, I should send them a completed Schedule D and Form 8949 with the information needed, including the cost or adjusted basis.
I did my taxes on Turbotax & input everything I thought was needed from Treasury Direct's rather confusing 1099s. But the TIPS never showed up on a Schedule D or 8949, & I didn't realize that was needed. Yes, I see now the TIPS are listed on the 1099-B, with the amounts listed in the "Proceeds" column & the Cost or Other Basis column -- blank, so foolishly I ignored them entirely. Lesson learned.
My questions are:
1. The IRS wants a Schedule D & 8949 with this info, but should that be just those forms with just these transactions, or an amended Schedule D that includes the other transactions I had reported earlier? Confusingly, the 11-page letter says (at another point) that it's unnecessary to do an amended return, but maybe that's just boilerplate. Should I go back to Turbotax to amend the return, which I guess will produce a new schedule D?
2. What is the cost basis of those TIPS & how do I find it? Is it just the purchase price, or does it include the interest paid over the years? Can Treasury Direct give me that info? How can it be documented?
I would appreciate any guidance you wise & empathetic folks can provide.
The discrepancy relates to 2 TIPS I had purchased for $25K each & at maturity totaled around $57K. The IRS letter refers to these as "securities" that were "sold or disposed of" and seems to say that since the proceeds ($57K) were reported to them with no cost basis indicated, they considered the cost basis to be zero; ergo, I owe $27K in taxes, penalties & interest. If I disagree, they say, I should send them a completed Schedule D and Form 8949 with the information needed, including the cost or adjusted basis.
I did my taxes on Turbotax & input everything I thought was needed from Treasury Direct's rather confusing 1099s. But the TIPS never showed up on a Schedule D or 8949, & I didn't realize that was needed. Yes, I see now the TIPS are listed on the 1099-B, with the amounts listed in the "Proceeds" column & the Cost or Other Basis column -- blank, so foolishly I ignored them entirely. Lesson learned.
My questions are:
1. The IRS wants a Schedule D & 8949 with this info, but should that be just those forms with just these transactions, or an amended Schedule D that includes the other transactions I had reported earlier? Confusingly, the 11-page letter says (at another point) that it's unnecessary to do an amended return, but maybe that's just boilerplate. Should I go back to Turbotax to amend the return, which I guess will produce a new schedule D?
2. What is the cost basis of those TIPS & how do I find it? Is it just the purchase price, or does it include the interest paid over the years? Can Treasury Direct give me that info? How can it be documented?
I would appreciate any guidance you wise & empathetic folks can provide.
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