You should speak with a tax lawyer right away. Many notices are time sensitive, particularly a Notice of Deficiency. Do not delay or you may loose your appeal rights!
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Have seen this issue many times before. A tax lawyer or CPA can help you as it is a run of the mill notice. What happens is that the IRS is given notice (per Form 1099-B) that you had sales proceeds from sale of securities in a brokerage account. However, the IRS does not give you credit for the cost basis in such securities sold so they send you a notice showing 100% of the proceeds as taxable income. You just need to send a letter explaining why you failed to report the sales they will list and explain that you have enclosed an amended Schedule D which reflects the appropriate gain or loss with respect to the unreported security transactions.
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What you likely received is a CP-2000 notice. This is a notice wherein the IRS picks up unreported income. This is easy to fix, but must be done so within certain timelines to avoid IRS collections. So, you should get to a tax attorney or a CPA experienced in working with CP-2000 notices. Essentially, the IRS assumes that you have no tax basis in the stock sales and would incur short-term capital gains. Our firm can assist you in this matter.
Marty Davidoff, firstname.lastname@example.org, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.