Your response was not sufficient and it was dismissed. You must have gotten a form 1099-S from the sale and failed to enter it on the original tax return and then when presented with the IRS CP2000 notice you did not respond appropriately so they ignored your response. This is a time where doing this yourself is ill advised so getting local professional assistance would be wise if the tax payer advocate or the local IRS office cannot help. Sadly you may have run out of time to fight the IRS determination and/or you may need to go to tax court.
