I recently got CP2000 in mail saying that I received income on securities ($30K worth), and have to pay $8.5K of additional taxes (including penalty and interest).
Securities listed on that CP2000 form is from my broker on some of stocks was sold that year. My company pays with 1/ Base salary and 2/ RSU stocks, which are vested during a year. My preference is to "sell enough to cover taxes during vesting", so that shares were sold at date I've acquired them to cover estimated taxes. Both: full cost of stares on vesting date and taxes paid for that amount was recored in form of paycheck and reflected on my W-2.
I forgot to include my 1099-B form with my tax return, which had this all transactions in it, and looks like "cost basis" was not reported to IRS which made it assume that it was 0, so this resulted in full cost of stocks being treated as income. My 1099-B shows that "Gross proceeds (Box 1d)" and "Cost Basis (Box 1e)" are almost equals and having couple cents difference (commission), so there was no gain on this shares.
So I plan to reply back to IRS that I do not agree with charges and include following supporting my case:
1. W-2, showing "<cost of all RSUs vested> RSU" in box 14-Other (to show that this vests has already been accounted for)
2. 1099-B from my broker, showing "Gross proceeds" and "Cost Basis" for all transactions.
3. Form 8949 with this transactions from 1099-B and Schedule D. (after rounding numbers up, I got "0" in total gain and on schedule D).
4. CP2000 response form (last pages), stating that I do not agree with changes and explaining same I wrote in this post.
They note in the letter that I do not need to send a 1040X and they will make any applicable corrections.
Will this be enough to resolve my case? Have I provided enough evidence? Will this reduce tax I owe, penalties and interest to 0, or I will still have to pay penalty for incorrect 1040 I initially sent?
