What can I do about this personal income tax situation - 2008 1040 help!?

Find your records showing the price you paid for the stock.

Then prepare a 2008 schedule D showing that it was a loss.

If you just got the CP2000 letter, submit this schedule D to them (the fax number is in the corner).

The way $2300 of interest morphed into a $2100 bill is because they apparently included the gross proceeds from the stock sale and used $0 as the basis. Using the correct basis will reduce the bill.

"My itemized deductions far exceeded my income for 2008"

That's why they are looking at your return. Take all your data to any tax man (do it now while they have nothing to do) and file an amended return. Yes, they will charge you a couple bucks to file the forms, but the IRS will also see that you used a professional service and cut you some slack as to the "you own us now" deadline.

oh yea, you need to file a 1040 X for that year, indicate your missing interest, and also the Sch D loss you had, which you can claim $3000 and $500 carryforward to 2009

if they claim you owe $2100 on a missing $2300 in interest, something else is missing here, that is far too much income tax for that amount of money

very possibly your 1099B only showed proceeds and you need to show what you sold with the purchase price and date to reduce the proceeds of those sales, which you indicate resulted in loss

Since you are in bad straits with the IRS, they will probably require you to provide documentation of that stock loss. You will need both the purchase and sale trade confirmation documents. If misplaced, contact your broker.