amended return supporting documentation

[mblatour]

Hi all,

Quick one. I have a client who didn't report his one and only stock sale transaction back on his '07 taxes and he got a CP2000 notice for it a couple of weeks ago. This stock has been a pain because it split several times over 30+ years. I have spent hours tracking down the necessary documentation to come up with his actual cost/basis information but it's 20+ pages long. Would you send it in with the CP2000 or not? Or would a completed Schedule D suffice?

I have to amend his MN return as well and just don't know if I am going to get a letter later on requesting the supporting documentation for the cost-basis information.

Thanks in advance for your thoughts,

~Becky

[David1980]

I would send in the completed Schedule D. If they want the documentation to prove basis, let them ask.

[WhiteOleander]

I agree. I would do a 1040X with the Sch D attached. No basis documentation sent in.

[luke]

spent tracking down CLIENT information to determine basis? This topic has been discussed before - hopefully you were compensated for HOURS spent!

[JohnH]

Piling on here. Only send the Schedule D to answer the question actually asked. If they want more info later, they know where to write your client & ask for it. Giving them more than they require at the outset means they may actually look at it and start asking questions they hadn't thought of without your documentation.

[taxxcpa]

I've had several clients who failed to report capital gains/losses. I sometimes attach 1099B forms, with amended returns but do not document basis for stocks held for several years. The IRS has never asked for documentation.
If you have documentation, hang on to it and only provide it if the IRS asks for it.

[Kram BergGold]

The IRs does not want you to prepare a 1040X. The only time I deviate from this is when the number of changes is so great that I feel a 1040X will clarify things. I would just attach a letter stating what I thing the additional tax or refund is based on the basis info provided.