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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4161
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I got a letter from the IRS for overdue tax return. Since I

Resolved Question:

I got a letter from the IRS for overdue tax return. Since I no longer live in the States by law I do not need to file. I did make some day trading and ended the year with over 7000 USD loss. When I called the IRS I was told that based on their records I had an income of 10 million and they want tax of 3 million. What is the best way of proving that I did not make any money. I could provide them my brokerage account statement but not sure if that would be accepted. What is the best way to go about it. I think the discrepancy between 7000 loss and 10 million gain is kind of steep.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Hi,

NPVAdvisor :

They do this all the time.... what happens is this ...

Customer:

hi

NPVAdvisor :

The brokerage firm only reports the proceeds of sale

Customer:

yes that is true

NPVAdvisor :

So until you file and do that schedule D that shows all the ins and outs... they see that as all profit

NPVAdvisor :

Many time the brokerage firm will havew what they call a schedule D report

Customer:

must I file shedule D? it is very hard as import in not available

NPVAdvisor :

I know TD ameritrad does, for example

Customer:

this relates to 2010 and no longer is available

NPVAdvisor :

Sorry, but yes that's the only way ... NOW, you can attach the activity report that substantiates a consolidated buy number and sell number ... (which means you don't have to list every single trade)

NPVAdvisor :

Your brokerage firm has to keep that byn law

NPVAdvisor :

They can run it for you, if you don't have acess onlie now

NPVAdvisor :

I had the very same happen to a client

NPVAdvisor :

We filed the return with the schedule D report from TD Ameritrade and it was all over

NPVAdvisor :

He only had about 20,000 in there, and ended up with a loss of about 2300 at the end ... they said he owed over $600,000

NPVAdvisor :

You can get an online version of turbotax for about $59 for 2010, whip out a return and send in the statement as documentation... That would do it.

Customer:

I have turbo tax for 2010 but it does not accept pd file transfer and they said to enter everything one by one

NPVAdvisor :

I would consolidate

NPVAdvisor :

Given that the loss will be obvious, and you do't have any other income

NPVAdvisor :

Just enter one buy and one sell, and attach the statement

Customer:

so you think it is worth a try signing the report and attaching the brokerage statement will all the transactions

NPVAdvisor :

That worked fine for my client ...

Customer:

what does it mean ?

NPVAdvisor :

Absoulutely, if you don't file for that ywar and show them that you actually lost money ... this will never go away

NPVAdvisor :

What does what mean?

Customer:

ok thanks I will try it

NPVAdvisor :

It'll work

NPVAdvisor :

Just get the return to print and send a COPY of that statement

Customer:

many thanks I hope so

NPVAdvisor :

You'll be fine... there are actually new laws in place now starte in 2012 that make the brokerages report both ends of the trades

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question

Customer:

yes I noticed and that seems to be just fine to avoid problems like this

Customer:

thanks for your help I feel a bit relieved that it happens to others as well

Customer:

will they let me know if the return was accepted or I need to contact them?

NPVAdvisor :

No problem, glad to be of help ... it's actually pretty common (scare tactic) that's why there was enough political clout to make them change the laq

NPVAdvisor :

"law"

Customer:

ok have a nice day will get to it now

NPVAdvisor :

You can go online to their site and use that function, or you can call, but they will probably do nothing ....... but stop hounding you

Customer:

well that would be enough thanks

NPVAdvisor :

Use the Where’s My Refund? tool to follow your tax return from receipt to issuance of your refund. While your tax return is being processed you can follow it through three states: Return Received,Refund Approved and Refund Sent.

Customer:

thanks perfect I am happy with your response

NPVAdvisor :

You positive feedback is thanks enough :)

NPVAdvisor :

I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

Customer:

ok no worries

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4161
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.


Thanks so much for the rating Jozsef,

If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.


Thanks again,
Lane

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