You don't have to go offshore. The same thing happened to me. What you need to do is get an accountant or get a copy of Turbotax for that year. Then you enter in all your info and make sure you fill out Schedule D. They'll give you the person's (examiner) name on their letter. I filled out a new tax form, and sent the letter below to the IRS. A few weeks later, they said "Thanks for the info, and we'll contact you if we need anything else." That was a few years ago. Haven't heard anything since.
-------------------------------------------
Dear Examiner:
I have attached a Schedule D form, which I did not include in my 2009 tax return. According to the CP 2000 letter, the securities income reported to the IRS was $xx,xxx. But this was using a zero cost basis for stocks sold. The schedule D form I have included provides the cost basis for all stocks sold. The final total for the Schedule D shows a net loss of $xx.
-------------------------------------------
Dear Examiner:
I have attached a Schedule D form, which I did not include in my 2009 tax return. According to the CP 2000 letter, the securities income reported to the IRS was $xx,xxx. But this was using a zero cost basis for stocks sold. The schedule D form I have included provides the cost basis for all stocks sold. The final total for the Schedule D shows a net loss of $xx.
Sincerely,
xxxxx