Please help! Got IRS CP2501 Notice - Need to send correct cost basis to IRS but confused about Schedule D

[Anonymous]

Hi!  I got a CP2501 notice from IRS saying that my 2020 tax return was missing some stock sales from UBS, one of the brokerages I used.  The IRS CP2501 notice shows the proceeds but completely neglects the cost basis.  It looks like the IRS doesn't know what the cost basis is (I think UBS didn't report the cost basis to the IRS, just the the total proceeds from the sale).  According to the IRS CP2501 notice: 

"if you have cost basis for the stock transactions in question, send us a completed Schedule D along with a completed Form 8949 (or similar attachment) showing the following for each listed stock transaction: asset name, date you acquired the asset, cost or adjusted basis."  

Here is where I'm confused: Do I send a Form 8949 and Schedule D that show ONLY the stock transactions associated with this UBS brokerage?  OR, do I send an updated Form 8949 and Schedule D that include all the transactions I made in 2020, which would therefore include ones I made through another brokerage Merrill (the Merrill transactions were already correctly submitted with my original tax return filing via the Schedule D and Form 8949, and they're not being questioned by the CP2501 notice).  I don't want to confuse the IRS, I just want them to know the cost basis for the UBS transactions when they consider the tax implication for those.  

Thanks for any guidance on this!  

[fanfare]

@Anonymous 

supply details such that the total proceeds of those transactions add up to the proceeds listed in your IRS letter.

If your assumption is correct the proceeds are listed under Box B or Box E on your original tax return.

Then supply a corrected Schedule D.

[Anonymous]

hi @fanfare - thank you so much for your reply!  I have a quick follow-up question I'd love to get your thoughts on.  

To clarify my situation, the transactions for the specific proceeds listed in the IRS letter were not part of my original tax return.  (that brokerage never mailed me a 1099 and in the midst of dealing with family illness and new job, I forgot to check online for it).  That's why the IRS sent me the letter; I feel awful about what happened.  

In a nutshell: I use multiple brokerages (Merrill & UBS), but in my original tax return, I only included the Merrill transactions on my Schedule D and Form 8949.  Now, the IRS notice is asking me about the UBS transactions.  The IRS seems to not know the cost basis for the UBS ones, so I need to update them on that. 

My question:  Do I send them a new Schedule D that includes BOTH UBS and Merrill, or do I send them a Schedule D that shows just the UBS transactions since the IRS already have my Merrill stuff from my original tax return?  And should I send them a new Form 8949 that shows just the UBS transactions, or should it include both UBS and Merrill?  

Thank you for any guidance.  

[fanfare]

The IRS seems to not know the cost basis for the UBS ones, so I need to update them on that. 

They seem not to know because that's how they do it ; they assume a basis of zero.

My question:  Do I send them a new Schedule D that includes BOTH UBS and Merrill, or do I send them a Schedule D that shows just the UBS transactions since the IRS already have my Merrill stuff from my original tax

return? 

There's only one Schedule D , I suggest including a correct and complete Schedule D.

That's what I suggested above.

Your missing transactions may end up in BOX A,D.

And should I send them a new Form 8949 that shows just the UBS transactions, or should it include both UBS

and Merrill? 

send a separate Form 8949 with details only for the missing transactions.

that's what I suggested above. that made sense if there was a box B,E subtotal for that amount.

You can send the entire set of 8949 documents if you prefer that.

Note: because of TurboTax new behavior for Box A and Box D, you might have difficulty.

and might  need to do the Form 8949 manually.

OR you can remind the IRS that Form 8949 is not required for Box A , D transactions without adjustments.

It depends on how many transactions are involved.

Once you supply the total cost basis, I suspect the IRS will be satisfied.

For best results, try to comply with the instructions in your letter.

Use your own judgement.

[Anonymous]

Got it.  Thank you!  The missing transactions are Box E according to the 1099-B from the brokerage, so I will send in an updated complete Schedule D along with a Form 8949 just for those missing transactions.