K-1 Filed In Wrong Year, IRS Letter, Abatement Request Made, Need to Amend 2019 Return

[user102154604906]

Hello. I'll try to be brief.

Facts:

1. Received a K-1 from the estate CPA for 2018, in December 2019.

2. Distribution made to me in 2019.

3. Sold the stock in 2019 with a short term loss of $5600. (D.O.D. to time of sale)

3. Estate closed in September 2019.

4. CPA told me to file the interest income in my 2019 return, I did and also paid the tax on this income.

5. Received IRS letter stating income was to be declared on my 2018 return, wants tax paid again plus penalty.

6. Just filed an Abatement Request.

Questions:

1. Should I put the K-1 info in my 2018 return to check the IRS numbers?

2. Which return(s) should the short term loss be reported in?

3. Which returns should be amended-2018 & 2019, or just 2019?

4. Will the 2018 & 2019 returns need to be amended before I can accurately prepare my 2020 return?

5. Anything else I should do?

Thank you in advance for any assistance you can provide!

[tagteam]

if you are currently in a correspondence audit with the IRS do not file anything unless you are specifically instructed to do so.

With respect to your 2020 return, you might want to apply for an extension if the matter is not resolved within the next four weeks or so.

Obviously, you should have received that 2018 K-1 much earlier than 12/2019, but the IRS is correct in the sense that the information on that K-1 should have been reported on your 2018 income tax return.

[MarilynG1]

If your IRS letter does not specifically state that you need to Amend your 2018 return, they may not need you to do this (or amend your 2019 return).

You could use the Contact Info provided in your letter to verify this.

Yes, you could open your 2018 return as if you were amending to check their calculations, although they often send you their calculations with the letter if tax is due. 

Click this link for info on what to do if You Received an IRS Notice.

This link gives instructions on How to Amend a Prior Year Return.