I forgot to include a Vanguard 1099-B for my 2018 taxes for a total gain of $780 on $35K sold. The IRS sent me a CP2000 notice which assumes a 0 cost basis and so they propose I owe $7K tax + $1.5K substantial tax understatement penalty and $700 in interest for a total of ~$9000.
I plan on replying back that I do not agree and including the 1099-B showing the $780 gain (~$34.2 cost basis) as well as a list of dividend received transactions older than a year since there is no "date acquired" for two of the transactions due to reinvested dividends I think.
They note in the letter that I do not need to send a 1040X and they will make any applicable corrections. Should I just wait for the correction to be made since the 1099-B clearly shows I only owe taxes on the $780 gain? That should eliminate the "substantial tax understatement penalty" and lower the tax and interest due as well.
