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Hi, my name is Mark. I would be happy to help you with your questions.
What years did you sell the stock? When your wife inherited the stock she should have received a step up in basis. This means that your wife's basis would be the Fair market value at the time the individual passed away. So depending on how the stocks did once she inherited there may be a small tax impact. Was the account in her name that sold the stock?
The sale of these stocks should have been reported on Schedule D of your tax return. Did you wife received a 1099-B for these stock transactions for these years?
And these were never reported on your taxes?
Probably not, how much stock did you see each year?
Have you received any notices from the IRS?
I am surprised that the IRS did not send a notice. The IRS matches the returns to the 1099 information.
This is for 2011 thru 2015? Did you file 2011 and 2012 on time?
You would need to find the value of the stocks when your wife inherited them (at the time of the person's death). This would be the cost basis that you would used for the sales.
Depending on how the stocks did from when you wife inherited them to the time where they were sold will determine if there is any capital gain or losses.
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So if the returns were timely filed for 2011 and 2012 and the unreported capital gain was not more than 25% of your adjusted gross income, the statute of limitation for these years would have expired. This means that you do not have to report the stock sales for these years. For 2013, 2014, and 2015 you would need to report the gains. Depending on your tax bracket the capital gains rate range from 0% to 20%.