Yes, the response times can be extended and you can provide additional information to show that whatever investment income is not taxable (all or some). But you need to contact the IRS immediately to let them know that you're not ignoring the notice. And contact your tax professional to get assistance in amending your return.
Evan A. Nielsen is licensed to practice law in California and handles federal tax matters throughout the U.S. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.
I recommend that you do your best to reply in a timely manner, you may still be able to contest the matter by filing a formal protest or tax court petition, but it is much easier to resolve by timely response to the notice of proposed adjustment
A tax lawyer may be able to review to determine such things as basis, purchase dates, prior or current year NOL etc. to reduce tax and interest liability.
Louis T. Wierenga Assisting in mitigating your business and tax risks. www.LTWLAW.com E Ltw@LtwLaw.com Twitter @LTWLAW The information provided is for general purposes only and should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.