Lost Money Trading but Now I Owe $2Million in Tax

Discussion in 'Taxes and Accounting' started by bbpp, Jun 25, 2016.

  1. bbpp


    I daytraded stocks 15 years ago, for 3 years. In any of the 3 years I didn't make any profits. So I thought I would not need to file a tax return.
    I had been fine until 2013, when IRS sent me a letter claiming I owe 2 M tax.
    IRS suspend my bank account and investigate my bank account history, only to find my bank account never had so much money, most of time there was only a few hundred, and never exceed a few thousand at any time.
    IRS closed the case as currently not collectible,but claiming I still owe 2M plus interest, and have to pay whenever in the future I have money.

    My question is: how can I make IRS believe I didn't make money on stocks, and didn't owe them money? I have asked some accountants but they say they don't know how to solve this. So who can I look for help?
    VPhantom and fx news portal like this.
  2. wartrace


    You need to find an enrolled agent tax accountant. What type of accountants did you ask? Something doesn't smell right with your story though; I haven't heard of the IRS going back 15 years.
  3. Baron

    Baron ET Founder

    The statute of limitations on them coming after you is generally three years. But since you never even filed a return, they can go back as far as they want.

    Once the IRS says you owe something, the burden of proof is on you to show that you don't. All you need to do is schedule an appointment with your local IRS office, and then bring in your monthly brokerage statements for the years in question to show that you never made a profit. It's really that simple. But if you don't have that documentation, then you'll need to engage the help of a professional to work yourself through this situation.
    Last edited: Jun 25, 2016
    JesseJamesFinn1 and VPhantom like this.
  4. R1234


    is it because of disallowed wash sales where they are counting most of your winning trades but disallowing most of your losing trades. If that is the case then it is a big problem. You should have formed a 'Trader' entity and done MTM accounting at the outset. Good luck to you.
  5. bbpp


    1. I had opened many broker accounts(more then 10) back then, and most of them broke and a few were bought by big brokers.So it is now impossible for me to get tax information from my old broker accounts.

    2. I lived in TX when I traded stocks, and 14 years ago I moved to NYC, so it is possible that they mailed me to my old address, but I didn't get the mails.
    The latest letter I got , it was a few month later since the mail sent out, and I immediately call IRS TX branch, and they said the case was transferred to NYC office. I called NYC office and explain to them, and sent letter to explain that I never had so much money in my life, as my bank account history show, but that didn't change their stance.

    3.Last year, I still received a letter from IRS , saying I still owe 2M plus interest.
    Are you guy saying this case should be eliminated after 3 years?
    I asked a few accounts here in NYC, and they said they don't know how to deal with this and this is the first time they heard.
    Another lawyer (with specialty in TAX)said she can solve this but she charge me $6000.
    Last edited: Jun 25, 2016
  6. bbpp


    Last edited: Jun 25, 2016
  7. dealmaker


    Weren't you 5 years old 15 years ago?
    SunTrader, FreakofNature and K-Pia like this.
  8. Between the 1 post new account and the story what we got here is an overdose of bullcrap.
  9. Amalgam


    Why didn't you file a return? No other income?
  10. Baron

    Baron ET Founder

    Based on all of your responses, I'd say you're screwed. None of those excuses are gonna fly with the IRS. Good luck.
    #10     Jun 25, 2016