IRS claims I owe $5000

It doesn't look like it's going to be that bad. Interactive Brokers provides a "txf" file for the 8949 data, which I imported into turbotax which then automatically creates the 8949 and Schedule D. Now I just have to send an amended return back to the IRS.
 
When the IRS does not know what your cost basis is they assume it is zero. This is why the IRS did not recognize your net loss.
 
The IRS makes mistakes. They do not like to deal with their errors.

Once they respond in writing that they do not understand, then it is wise to call your Congressional rep and have the IRS Congressional liaison take over getting the IRS off your back.
 
jodistrict said:
I traded all last year full time and I lost money. I am doing this full time and listed my profession as trader. I received a notice from the IRS today that I owe them $5000. The IRS sent me printouts from my Interactive Brokers account. Could somebody recommend a professional to help me straighten this out? Do I need to find a trading accountant?
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Classic problem. The IRS sends jeopardy assessments - made up amounts - for securities 1099-Bs as they can't be sure a taxpayer has capital gains or losses. With cost-basis reporting they have a clue, but they are still not certain. The jeopardy assessment is intended to compel a taxpayer to file a complete Form 8949 with full line-by-line reporting of securities trades. We cover this in Green's 2014 Trader Tax Guide. Also see http://www.greentradertax.com/trader-tax-center/dealing-with-the-irs-and-states/ and http://www.greentradertax.com/trader-tax-center/cost-basis-reporting/
 
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