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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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On my 2007 tax return none of my stock transactions were listed.

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On my 2007 tax return none of my stock transactions were listed. I erroneously thought they were all in 2008, I was just looking through my statements and realized I was wrong. The 2007 transactions were small and netted out to a loss. I'd rather not "rock the boat" and file an amended return, the loss wasn't large enough to make a big difference. I guess one of my concerns is does the IRS get copies of all stock transactions and thus will be able to analyze the fact that I didn't include them in my return (or by analyze by some other method.) If not I'll leave well enough alone.

Any time you have a sale of stocks, those transactions are reported to you on a 1099-B form. A copy of that same form goes to the IRS and to the state where you live.

Eventually the IRS will contact you regarding these transactions. They will also treat the transactions as though the entire amount you received was profit, as without you reporting your cost basis, they have no way of knowing whether you actually had a gain or a loss. So they treat the entire amount you received as taxable.

It will be in your best interest to file an amended return with both the IRS and the state. If you had a loss then you will owe no more taxes, and therefore will also have no penalties. But you should set the record straight rather than waiting for the IRS to notify you at a later date. It will greatly simply things for you if you handle it now in this manner by filing amended returns.

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Thank you bgloni.

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