"did you forget to include something on your return?" from the irs

[darlenesierocuk195812]

I got this mail piece from the IRS today - for tax year 2023.  We entered all interested received as noted on the 1099-INT.  And apparently the IRS used a cost basis of 0 (perhaps due to a change in brokerage houses by our previous employer) vs the records we had.  How do we best defend the information we have vs what the IRS is saying is coming from "reported by 3rd parties" who are unnamed?

[LaShaunA3 · Accepted solution]

The best way to defend your position is to respond by the deadline and include copies of documents that support your cost basis.

Your response should include: 

• The notice response form marked “disagree,” 
• Short letter explaining the brokerage change/transfer and why your basis is correct, and
• Supporting records such as the 1099-B, year-end statements, trade confirmations, transfer statement, and a revised Form 8949/Schedule D showing proceeds and your basis.

For more details, see the IRS guidance on CP2000 notices

[darlenesierocuk195812]

I discovered, I missed ONE 1099B item.  It was a type of transaction that does not explicitly show a gain - ie a treasury sold at a gain. (I did pay the interest on the treasury.) As a result, the IRS is challenging ALL the 1099B entries.  I am making the one correction (and paying that missing tax), and providing documentation (worksheets with item by item basis for all 1099B) for the rest.
I assume since I made one mistake, there is a presumption of a systemic problem.  No so, but OK - I get it.  Thank you for your kind reply 🙂