Home |IRS Tax Return | What steps can we take immediately to address the IRS Notice of Deficiency for my son's cryptocurrency trading on Robinhood, where they've added every transaction as income and he's facing a substantial tax bill and penalty that he can't afford as a college student, with our court petition deadline approaching soon?

What steps can we take immediately to address the IRS Notice of Deficiency for my son's cryptocurrency trading on Robinhood, where they've added every transaction as income and he's facing a substantial tax bill and penalty that he can't afford as a college student, with our court petition deadline approaching soon?

Robert James, 20+ years of experience in IRS matters
Answered on September 16,2023

File the petition with Tax Court!

That is the most important thing to do before the deadline. It is extremely difficult to correct this if he misses that deadline, not to mention expensive.

Then he needs to find a tax professional to help with this - preferably someone with experience representing taxpayers with IRS - Taxcure.com is one site with listings.

He'll be given the chance to work with IRS Appeals instead of going to Tax Court, and he can provide the correct forms (Form 8949 & Schedule D) that show his actual net gain or loss for the year.

If he was trading in other tax years then he probably should amend those years, but for this year it's gone past the point of just amending.

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