KEEPING GOOD RECORDS (T/G 501) covers those many tax situations requiring hard copy records for a few as 5 years to as many as 50, the importance of organizing tax "correspondence," the distinction between taxable and nontaxable bank deposits, and the expertise needed for "librarying" records for prompt retrieval. Also covered:

• Principal residence: basic documents
• Retirement & social security records
• Fantasies with investment rollovers
• Tracing "gift loans" & inheritances
• No privacy in foreign tax havens
• Establishing credibility when records are lost

Keeping Good Records
Book:  501

Table of Content

1.  STATUTORY BACKGROUND

    Section 6001:  The Mandate                  1-2
    “Shall” Means No Excuses                    1-3
    Excerpts from Regulations                   1-5
    Procedures re Electronic Records            1-6
    Section 6011:  Return Forms                 1-8
    Section 7602:  Examination of Records       1-10
    Keep Records on the IRS                     1-12
    Section 261: Mace Action                    1-13
    Section 446:  Income Records                1-14
    Gross Income:  Worldwide                    1-16

2.  FORMING GOOD HABITS                         2-1
    
    Prelude to Bank Records                     2-2
    Here Comes the Problem                      2-3
    Depository Discipline Needed                2-5
    Dedicate One Depository Account             2-7
    Maintain Deposit Hard Copies                2-9
    Make Transfer Deposits by Check             2-10
    Think Tax Deductions                        2-12
    Proof of Payment Needed                     2-14
    File Returns on Time                        2-15
    Librarying Your Records                     2-17

3.  PRINCIPAL RESIDENCES                        3-1

    When Residence Purchased                    3-2
    Tax Character Explained                     3-3
    Basis Documents to Keep                     3-6
    When Residence Sold                         3-7
    Example of 1099-S Inattention               3-9
    Form 2119 for Self-Reporting                3-10
    Gain Rule Changed:  1997                    3-11
    Extent of “Relief” Granted                  3-13
    What’s a “Qualified” Sale?                  3-15
    Other Complexities Introduced               3-17

4.  RETIREMENT PLANS                            4-1
    
    The Social Security “System”                4-2
    Start Your Records Now                      4-3
    Batch-Index Every 5 Years                   4-4
    An Inequity Explained                       4-7
    Employer Sponsored Plans                    4-8
    When Changing Employers                     4-9
    Confusion Over IRAs                         4-10
    Nondeductible IRA Records                   4-12
    Recap of Records Needed                     4-13
    Working in Different States                 4-15

5.  INVESTMENT ACCOUNTS 5-1

    Classifying Your Account (s)                5-2
    Transactional “Dispositions”                5-4
    “Cost or Other Basis” Explained             5-5
    Fantasies With “Rollovers”                  5-7
    Form 1099-B & Substitutes                   5-8
    Records Needed for Schedule D               5-10
    Other Forms & Records                       5-13
    When Dividends “Reinvested”                 5-14
    Global Investing; Foreign Tax               5-16

6.  GIFTS, INHERITANCES, ETC.                   6-1

    Basic Example of “Why”                      6-2
    Money Gifts of $10,000 or Less              6-3
    Gift Tax Law Summarized                     6-6
    Gift Loans and AFRs                         6-7
    Inheritance Records:  Different Rules       6-9
    Form 706 Information Needed                 6-11
    What If No Form 706?                        6-12
    Generation-Skipping Transfers (GST)         6-14
    Transferor’s Records:  Cumulative           6-16

7.  FOREIGN ACCOUNTS & TRUSTS                   7-1

    Beware of Tax Havens                        7-2
    Be Informed of Section 982                  7-4
    Two Foreign Accounts Questions              7-5
    Form TD F 90-22.1: Overview                 7-7
    Form 3520-A:  A “Conduit” Return            7-9
    New Law:  Section 684                       7-12
    Form 926 Overview                           7-14
    Foreign Sales Corporations                  7-15
    Form 1116:  Foreign Tax Credit              7-18

8.  ACTIVE BUSINESS ASSETS                      8-1

    Material Participation Defined              8-2
    Asset Acquisition Documents                 8-4
    Statutory Class Lives                       8-5
    Form 4562 (Depreciation) Overview           8-7
    The Section 179 Election                    8-9
    Systematizing Your Records                  8-10
    Land Does Not Depreciate                    8-12
    Leasehold Improvements                      8-13
    Useless and Worn Out Assets                 8-14
    When Useful Assets Sold                     8-15

9.  CASUALTY & THEFT LOSSES                     9-1

    The Basic Law: Section 165                  9-2
    Documenting the Loss Event                  9-4
    Type of Event Not Recognized                9-5
    The “Property Description” Stage            9-6
    Cost or Basis Records                       9-8
    Documentation of Reimbursement Effort       9-9
    Before & After Appraisals                   9-10
    The Computational Mechanics                 9-11
    The 10% AGI Threshold                       9-14
    Section 165 ( c ) Explained                 9-16

10. RECORDS LOST OR DESTROYED                   10-1
    
    Establishing Your Credibility               10-2
    Common “Lost Records” Causes                10-4
    Common “Destroyed Records” Causes           10-5
    Generally: What to Do                       10-6
    “Cohan Rule” Is Passe                       10-8
    Rely on Reg. 1.274-5T ( c )(5)              10-10
    Reconstruction of Income                    10-11
    Beware of IRS Reconstructions               10-13
    Bank Microfilm Records                      10-15
    The “De Minimis” Rule                       10-17

11. TAX “CORRESPONDENCE”                        11-1
    
    Simple Example: Refund Check                11-2
    Organize Chronologically, by Tax Year       11-3
    How “Messes” Get Started                    11-6
    Example: Final Notice by IRS                11-8
    Federal/State Computer Exchanges            11-10
    True Case of Virus Horror                   11-11
    Getting Past the Veneer                     11-11
    Penchant for Penalties                      11-14
    Hardship Relief: From 911                   11-16

12. THE PURGING PROCESS                         12-1

    Kiddie Tax Returns                          12-2
    Working Minors & Young Adults               12-3
    Three “Starter” Years                       12-4
    The “Purge Cycle” is 5 Years                12-6
    Selectivity When Purging                    12-7
    Keep All Audit Reports                      12-10
    Keep Divorce Records, Too                   12-11
    Keep Depreciation Worksheets                12-12
    Tax Deferred Exchanges                      12-13
    Nonresident State Returns                   12-15
    Unlocking Capital Gains                     12-16
    The Final Stage                             12-18