CP2000 Notice for Stock Sales or Form 1099-B: Documents to Gather

An IRS CP2000 notice about stock sales or Form 1099-B often arises because a broker reported the proceeds from sales that don’t appear to match the return on file. This article explains, in plain English, the documents you may want to gather and review. It is educational only and does not tell you how to answer your own notice. For a general overview of documents, you can also read the CP2000 notice document checklist.

Read the notice and check the deadline

Review the notice carefully and note the tax year, the brokerage or payer named, the proposed amount, and the response deadline. Plan to reply by the date listed on the notice.

Proceeds versus gains: a common source of confusion

A 1099-B may report the proceeds from a sale — the total amount received — which is not the same as the gain, the amount left after subtracting your cost basis. When cost basis was not reported to the IRS, a proposed change can be based on proceeds rather than on gain. Reviewing your brokerage records to see proceeds and basis side by side can help you understand what the notice reflects.

Documents to gather

Depending on what your notice covers, the following records are often useful for securities transactions:

• Form 1099-B and the year-end brokerage statement.
• Records showing your cost basis for each lot sold.
• Purchase confirmations or acquisition records.
• The part of the return where the sales were reported (for example, the capital-gains schedule).
• Corrected 1099-B forms, if the broker issued any.

Wash sales and other complexity

Securities reporting can be intricate. Wash-sale rules, adjustments, multiple lots, options, and similar items can all affect how a sale is reflected, and crypto transactions add their own complications. These details are easy to misread, so it’s worth being careful and considering professional review when the situation is complex.

When to consider professional help

Consider having a qualified tax professional review your notice if it involves stock or crypto sales with complex cost basis, wash sales, large amounts, a deadline that has passed or is close, or anything that is unclear or disputed. A professional can review your specific circumstances in a way a general article cannot.

Completing and sending the response

If a response form is included with your notice, you can complete and sign it following the instructions and include supporting documentation where relevant. Send the response using the instructions on the notice, and keep copies for your records. Read any draft carefully against your records before sending anything to the IRS.

For more background on these notices, see the CP2000 Helper blog.

CP2000 Helper can help you organize a response pack before you decide what to send.