I hope someone here might be able to give me a clue.

I overpaid my taxes for the first time in 10 years.
Since I was getting a refund, I filed earlier than I usually do and received my small refund.
Two weeks later I receive a 1099-B for a small amount from a (I think forced) sale of stock.
I am sure this amount is a loss but I don't have records (poor record keeping) of the of the original purchase price from 30 something years ago.
I put it in my software and now it says I am owed $9 less of a refund.

Do I need to return the refund and start over?
Or, do I just need to send them a check for the $9 overpayment or what?

Any help is appreciated.

I did an NUA from my 401K after retiring, that is a capital gains event. 38 months later I get a letter from my custodian saying they figured the basis wrong. I called my tax guy and he said the window on cap gains revisions is 3 years and to just forget it. So I did. If I end up getting Trumped by some overzealous IRS Agent I'll revisit this thread. FWIW I can't find any difference between what my tax return says and what the correction is.

redaszag99 said:

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I wouldn't do anything

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I agree with this. If the IRS reconciles your return with the 1099's reported, you will get a notice that states you owe the $9. At that point, just pay the $9.

You never received that 1099-B

Troglodyte said:

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redaszag99 said:

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I wouldn't do anything

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I agree with this. If the IRS reconciles your return with the 1099's reported, you will get a notice that states you owe the $9. At that point, just pay the $9.

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2 things:

1. His/Her 1099-B will be an non-covered (Box E) LT gain. The IRS will not know his basis. They will assume he has no basis and give him a capital gain for the full amount. Whatever that amount is will determine what the IRS says the tax will be. In other words - its not guaranteed its $9

2. All that said, the IRS will not waste the paper trying to collect $9.

I think the worst case scenario is you receive a letter saying you owe $12.00 to $15.00. Whatever the letter says, send $5.00 more, so if they say you owe $15.00, send $20.00 and be done with it. The interest keeps accruing, so you always send a bit extra so you are done.

Six months later they will send you a check back for $4.10 once they calculate the interest on the time it took between their communication and your payment.

gigemhilo said:

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Troglodyte said:

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redaszag99 said:

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I wouldn't do anything

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I agree with this. If the IRS reconciles your return with the 1099's reported, you will get a notice that states you owe the $9. At that point, just pay the $9.

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2 things:

1. His/Her 1099-B will be an non-covered (Box E) LT gain. The IRS will not know his basis. They will assume he has no basis and give him a capital gain for the full amount. Whatever that amount is will determine what the IRS says the tax will be. In other words - its not guaranteed its $9

2. All that said, the IRS will not waste the paper trying to collect $9.

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If they assume zero cost basis like they always do, won't they send him a letter stating he owes more than $9 and to send the $ or prove why he owes less?

Isn't this one of the easiest ways for them to send a letter (tax payer didn't disclose the 1099-B)?

I would think the letter would be sent regardless because it is computer generated (no clue if true). I would also think that the letter would depend on how much in proceeds he received since that is what the IRS thinks the gain will be.

Harkrider 93 said:

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gigemhilo said:

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Troglodyte said:

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redaszag99 said:

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I wouldn't do anything

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I agree with this. If the IRS reconciles your return with the 1099's reported, you will get a notice that states you owe the $9. At that point, just pay the $9.

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2 things:

1. His/Her 1099-B will be an non-covered (Box E) LT gain. The IRS will not know his basis. They will assume he has no basis and give him a capital gain for the full amount. Whatever that amount is will determine what the IRS says the tax will be. In other words - its not guaranteed its $9

2. All that said, the IRS will not waste the paper trying to collect $9.

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If they assume zero cost basis like they always do, won't they send him a letter stating he owes more than $9 and to send the $ or prove why he owes less?

Isn't this one of the easiest ways for them to send a letter (tax payer didn't disclose the 1099-B)?

I would think the letter would be sent regardless because it is computer generated (no clue if true). I would also think that the letter would depend on how much in proceeds he received since that is what the IRS thinks the gain will be.

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In my experience, they do not always send a letter for small changes/omissions that lead to a small amount due. On some returns, there could be a $9 difference due to rounding differences. There is a point where they leave it alone. Now, I do not know what the threshold for that letter is, but nominal changes are not always addressed.

My advice on small amounts is usually "If they want it, let them come and get it." No one is going to jail over $9. If anything, they may have to pay a dollar in interest if the IRS decides they care enough, but no one is getting in trouble here.

gigemhilo said:

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Troglodyte said:

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redaszag99 said:

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I wouldn't do anything

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I agree with this. If the IRS reconciles your return with the 1099's reported, you will get a notice that states you owe the $9. At that point, just pay the $9.

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2 things:

1. His/Her 1099-B will be an non-covered (Box E) LT gain. The IRS will not know his basis. They will assume he has no basis and give him a capital gain for the full amount. Whatever that amount is will determine what the IRS says the tax will be. In other words - its not guaranteed its $9

2. All that said, the IRS will not waste the paper trying to collect $9.

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Wish that were true. IRS audited my mom and uncovered that she didn't include the 12 dollars of interest she earned from her bank account.

That wasn't the premise. They absolutely will care about the 9 dollars if they decide to look into it.

Philip J Fry said:

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That wasn't the premise. They absolutely will care about the 9 dollars if they decide to look into it.

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So they prompted an audit because your mother omitted the $12 interest? Or they audited your mom and during that audit they found that discrepancy?

What gigemhilo (CPA) is saying is that they're not likely to come after $9. If they find it during a random audit or an audit that was triggered by something bigger, then sure they may add that to the mix, but the likelihood of them initiating contact with a tax payer over the $9 is extremely unlikely.

It's the IRS. Never know what they will do or why. I pay for an accountant and tax person precisely for this reason- that if a mistake is made that at least it won't be my fault or my intention.

12 dollars. (not 12k) and it was a full audit. That's all the IRS found wrong and then proceeded to charge her a fee for missing it.

I don't think the 12 dollars prompted the audit itself, but who knows. It could have been that they had the 1098 on file and didn't see it in her e-file. I'm not sure we know why they audited her to begin with. All I know is, they cared about 12 dollars of interest earned in a savings account.

So I'm confused. If you have a 1099 and you don't report it, don't you open yourself up for more scrutiny? How is this different than the OPs scenario?

A simple letter vs an audit?

Philip J Fry said:

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So I'm confused. If you have a 1099 and you don't report it, don't you open yourself up for more scrutiny? How is this different than the OPs scenario?

A simple letter vs an audit?

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Not really, the IRS system is not that sophisticated to the point of more scrutiny. Even though I had some clients with significant audit adjustments (unreasonable compensation issues, farm losses recharacterized as hobby losses, etc.) the client was not looked at after the initial audit. They would deal with the year under audit, the prior two years, but we never heard from them again for subsequent years.

1099s get left out a lot of times. Generally, all that happens is a letter from the IRS saying things did not match up, they add the 1099 income to what you reported and inform you to pay it, unless you disagree (reported in error to you, was in the return but in the wrong place).

I have had clients that did get audited due to a mismatch but those cases involved way more than $12 of interest income and the returns were very involved returns. I guess the IRS figured if you were foolish enough to leave out some significant item that had been reported to you on a 1099, maybe some of your business expenses, farm expenses, and/or rental property expenses might need to be looked at.