IRS Notice received - 'your tax return doesn't match the info we have on file'. How to respond.

[RangerRobin661]

I received a notice from the IRS stating 'the info on my return does not match the info they have on file.' I sold a long term investment property in Dec 2017 and completed a like kind 1031 exchange in early 2018, using an intermediary, meeting the identification and exchange deadlines. The IRS notice shows the $765,000 sale of the investment property and states I did not show that on my return. I filed Form 8824 along with my 2017 return showing the sale amounts and replacement property with higher cost after adjustments and deferred gain amounts etc. My question is, should I seek more professional advice before responding to this inquiry letter? I did report the completed 1031 exchange on the taxes. Is this just as simple as explaining that Form 8824 was filed to show that sale? I have never gotten an inquiry from the IRS and want to ensure I do not make a mistake in how I respond. Thanks

[tagteam · Accepted solution]

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@RangerRobin661 wrote:

Is this just as simple as explaining that Form 8824 was filed to show that sale?

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It could be since it appears they have no idea that an exchange was effected. Rather, it appears they believe there was a sale and that the sale was not reported. 

Before proceeding, you might want to visit the TurboTax Audit Support Center as it could be of some utility even if you did not purchase Audit Defense.

https://support.turbotax.intuit.com/irs-notice/audit-support/

If the situation becomes more complicated than informing the IRS that you did a 1031 exchange (and providing the requisite documentation), then you should definitely seek professional guidance.