Welcome and thanks for your question!
Sorry to hear you are in this situation.
The IRS will have assumed all of the proceeds from the security sales is gain. They are basing the tax off the gross proceeds.
Since you state
most of the amount due relates to security sales, your best option will be to amend your 2010 tax return
to report the sales and their related cost basis. Since reporting
the cost will drastically reduce the gain (or maybe create a loss depending on the cost), this will greatly reduce the amount of tax that the IRS is saying you owe. Be sure to include any other additional income
the IRS reported if you do not dispute it. If you do not have records of your security sales (you should have received a Form 1099-B
from the brokerage firm), you will need to contact the brokerage firm.
Lack of knowledge or involuntary act will not get you out of owing tax to the IRS on the income. If after you file an amended return
, you still owe a significant amount of tax, it may get you out of paying some of the penalties (if the IRS is assessing any) but you will still be responsible for the tax and any interest
charges on unpaid tax.
Please let me know if you need additional clarification and I will gladly assist you. If not, then I ask you to please give my answer a positive rating. Thank you!