CP2000 Retirement Income Defense

Categories: CP2000, IRS CE
Wishlist Share

About Course

Securities-sale CP2000 notices are not the only recurring pattern in retirement taxation — Form 1099-R mismatches involving IRA and employer-plan distributions generate a distinct set of notices with their own diagnostic and evidentiary demands. This self-study program gives Enrolled Agents and tax return preparers a narrow, practice-focused framework for exactly this fact pattern: reading Boxes 1, 2a, 2b, 5, and 7 together to diagnose the actual mismatch, assembling evidence for a direct, 60-day, or partial rollover, reconstructing IRA basis and supporting a §72(t) exception on Form 5329, and building a complete, evidence-based response package.

This course assumes working knowledge of the substantive retirement-distribution rules — rollover mechanics, the Form 8606 pro-rata rule, Roth conversion taxation, and the full §72(t) exceptions table — and of the general CP2000/Automated Underreporter response process, both covered in depth elsewhere in this catalog, and does not re-teach either. It focuses specifically on the retirement-income mismatch fact pattern: diagnosing a Form 1099-R-driven notice against the payer’s actual reported data, documenting what actually happened with a rollover, reconstructing missing basis and exception documentation, and assembling a response an IRS reviewer can act on without a second round of correspondence.

Show More

What Will You Learn?

  • Diagnose a Form 1099-R-driven CP2000 mismatch by cross-reading Boxes 1, 2a, 2b, 5, and 7 against the payer-issued statement, the IRS wage-and-income transcript, and the notice attachment
  • Determine whether a proposed taxable amount conflicts with the actual rollover transaction and the payer-reported data, including recognizing that a Code G distribution is not automatically nontaxable
  • Assemble the documentary evidence that establishes a direct, 60-day, or partial rollover, without re-deriving the underlying rollover rules, including the self-certification procedure under Revenue Procedure 2020-46 when applicable
  • Reconstruct a taxpayer's IRA basis history from Forms 8606, 5498, 1099-R, and prior returns using the actual pro-rata computation, when records are incomplete or a prior Form 8606 was never filed
  • Identify and document an applicable §72(t) exception on Form 5329, including the correct use of code 99 when more than one exception applies to a single distribution
  • Determine the appropriate filing path for a prior-year Form 5329 — coordinated with Form 1040-X once an original return has been filed for that year, or filed standalone only where no original return was ever filed
  • Build a retirement-income CP2000 response package using only the elements the specific case requires, correctly distinguishing taxable income from the separate 10% early-distribution additional tax throughout

Course Content

Module 1 — Diagnosing a 1099-R CP2000 Mismatch
This module teaches you to diagnose a Form 1099-R-driven CP2000 mismatch by cross-reading Boxes 1, 2a, 2b, 5, and 7 against the payer-issued statement, the IRS wage-and-income transcript, and the notice attachment. You will learn why Code G does not guarantee a fully nontaxable transaction and how to classify a flagged distribution into one of the recurring retirement-income mismatch patterns. By the end of this module, you will be able to determine whether a proposed taxable amount actually conflicts with the underlying transaction and the payer's own reported data.

  • Diagnosing a 1099-R CP2000 Mismatch

Module 2 — Documenting and Defending a Rollover
This module presents the documentary evidence needed to establish a direct, 60-day, or partial rollover, including the self-certification procedure under Revenue Procedure 2016-47 for a genuinely late deposit. You will learn how withholding that is not replaced from other funds is treated, why Form 5498 applies only to an IRA destination, and how to match the distributing and receiving records against each other. By the end of this module, you will be able to assemble a complete rollover evidence file appropriate to each of the three recurring rollover patterns.

Module 3 — Reconstructing IRA Basis and Supporting Form 5329 Positions
This module covers reconstructing a taxpayer's IRA basis history from Forms 8606, 5498, 1099-R, and prior returns when records are incomplete, including the actual pro-rata computation and the basis effects of a divorce-related IRA transfer. You will learn when Form 5329 is needed, how to compute the amount excepted from the 10% additional tax, and how to coordinate Form 5329 with the notice response and Form 1040-X. By the end of this module, you will be able to reconstruct missing basis and substantiate a §72(t) exception for a CP2000 response.

Module 4 — Building the Retirement-Income Response Package
This module completes the response package by tying together the diagnosis, rollover evidence, and basis/Form 5329 documentation from the first three modules into a single transaction-level reconciliation. You will learn when a payer correction is appropriate, how to draft a notice-specific response narrative that separates taxable income from the 10% additional tax, and how to handle incomplete evidence and supplemental responses. By the end of this module, you will be able to assemble a complete, evidence-based retirement-income CP2000 response package.

Final Assessment – CP2000 Retirement Income Defense
You have completed a comprehensive review of the topics presented throughout this course and are now prepared to demonstrate your understanding of the key concepts. The following final examination assesses your knowledge of the material covered in all four modules. A passing score of 70% is required to successfully complete the course.

Scroll to Top