I Received a CP2000 Notice from the IRS Regarding Securities I Sold

September 02, 2015 by Dave Du Val, EA
Stock Chart

Hey Dave,

I got a CP2000 notice from the IRS. It says I owe $12,269 for securities I sold in 2013. I purchased the stock in 2005 and sold it at a loss of almost $10,000, which is why I didn’t include it on my tax return. Why did I receive this letter, and what should I do about it? Unfortunately, I just found out about your company and I don’t have a membership for my 2013 tax return.




The letter you received is sometimes called a “mismatch” notice. The IRS issues these mismatch letters when the computerized information they receive from third parties − such as banks and brokerage firms − does not match up with the transactions you reported on your tax return.

When you sell stock, you are required to include the sale information on your tax return - even if the sale results in a loss. If you don’t report it, the IRS will have the information about how much you sold the stock for, but not how much you purchased it for. And while you may have sold your stock at a loss, the IRS will assume you have a short-term gain in the amount of your sales price if you do not report your purchase dates and “basis” in the stock, which is what you paid for it.

Since 2011, brokers have been required to include the adjusted cost basis of “covered securities” on the 1099-B Forms they send to their customers. The term “covered securities” generally means corporate stock shares purchased after 2010. Since you acquired this stock prior to 2010, your purchase records will be your best option for determining your cost basis.

And since the proposed amount due on the CP2000 Notice is not correct, you will need to send back the signed Response Form that comes with the notice along with a statement explaining the reason for the discrepancy – that you omitted the sale from your tax return. Along with your letter, include Form 8949 and Schedule D worksheets showing your sales price, cost basis, and purchase dates; this will enable you and the IRS to calculate the actual gain or loss on the securities sales and determine whether they should be classified as “short-term” or “long-term.”

Since capital losses are limited to $3,000 per year, you will have a carryover loss.  In your letter, you should also state you understand that you have a carryover loss and that you will correct your carryover losses on your tax returns for future years. And be sure to put a note in your tax file reminding you to make this change next year when you do your taxes.

Deductibly Yours,


Facing an Audit?

We Can Help!



David E. Du Val, EA
Chief Compliance Officer for TRI Holdco


Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


Recent Articles

Woman Reading Letter
IRS Notice CP21C is sent out when a taxpayer requests to make a change to their tax return. The notice informs the taxpayer that the change has been completed.
House for Sale
Details regarding the disposition of grouping of activities in order to more easily satisfy the material participation requirements for the RE Pro status.
Man opening a letter
IRS CP06A notice asks you to verify the Premium Tax Credit you claimed on your tax return with documentation. How should you properly respond to this notice?
Woman reading a letter and holding her phone
Notice CP14H is issued by the IRS to inform you of your unpaid shared responsibility payment that is due and to request that payment. How should you respond?
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.