Isn't it great to have your taxes done? Well, almost. While doing my 1997 return, I discovered that I failed to report the sale of some stock on my 1996 return. Now, I know that the best thing to do is to file an admended return.

But...the sale was a result of the ATT spin off of Lucent. They distributed whole shares and paid cash for partial shares. The proceeds from the sale were a total of $2.46. I haven't calculated the cost basis for the partial share that was sold. I accummulated the ATT through their DRIP over a 20 year period, and I'm not looking forward to the calculation. Its possible that I even had a gain on the sale. I know this doesn't matter and that I should file an amended return. Even with a $0.00 cost basis the most I would owe is $.76 plus interest and penalties. And it is very likely that there is no tax liability. To me the amounts just don't seem material.

So any opinions on whether I should go through all the work of filing the amended return now, or just wait until the IRS sends out the notification letter that I owe them $.76 plus interest and penalties?

The calculation isn't difficult and you will need to do it to allocate basis when (or maybe if) you sell ATT or Lucent shares. The IRS should have a record of this payment and may generate a letter to you. I bet that they have better things to do. By the way, I saw in and IRS email that more than a million taxpayers have failed to file a needed schedule D. In the past this wasn't required for some mutual fund shareholders without other events to report. They are all getting letters to re-file with schedule D.

<<So any opinions on whether I should go through all the work of filing the amended return now, or
just wait until the IRS sends out the notification letter that I owe them $.76 plus interest and
penalties?>>

I thought the IRS had a rule that if you owed less than a dollar, you don't have to pay it. (Or if they owe you less than a dollar, they don't pay it.) I sure wouldn't bother with filing an amended return for a $2.46 difference.

I'm all for strict compliance with the law. But don't even think of filing an amended return to report an additional $2.46 of income. It would cost the IRS more than that amount to process the return, so they definitely don't want to receive it. And they won't audit you for that amount. They might even think you're a tax protester trying to foul up their system by filing such a pointless amendment!

KAT in Chicagoland
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Thanks to everyone for the feedback. I really couldn't believe that the IRS would want to see an amended return for $2.46. But I was concerned that this one mistake might cause an audit just to see what else I might have missed. I hope they show the same logic as those who responded.