Publication 530 |
2001 Tax Year |
Keeping Records
Keeping full and accurate records is vital to properly report your
income and expenses, to support your deductions, and to know the basis
or adjusted basis of your home. These records include your purchase
contract and settlement papers if you bought the property, or other
objective evidence if you acquired it by gift, inheritance, or similar
means. You should keep any receipts, canceled checks, and similar
evidence for improvements or other additions to the basis. In
addition, you should keep track of any decreases to the basis such as
those listed in Table 3.
How to keep records.
How you keep records is up to you, but they must be clear and
accurate and must be available to the IRS.
How long to keep records.
You must keep your records for as long as they are important for
meeting any provision of the federal tax law.
Keep records that support an item of income or a deduction
appearing on a return until the period of limitations for the return
runs out. (A period of limitations is the period of time after which
no legal action can be brought.) For assessment of tax you owe, this
is generally 3 years from the date you filed the return. For filing a
claim for credit or refund, this is generally 3 years from the date
you filed the original return, or 2 years from the date you paid the
tax, whichever is later. Returns filed before the due date are treated
as filed on the due date.
You may need to keep records relating to the basis of property
(discussed earlier) longer than the period of limitations. Keep those
records as long as they are important in figuring the basis of the
original or replacement property. Generally, this means for as long as
you own the property and, after you dispose of it, for the period of
limitations that applies to you.
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