What is in accountant’s permanent file



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What is an accountant’s permanent file?

by Tony Novak, CPA, MBA, MT     April 29, 2015

Accountants keep a number of reference documents for each client in addition to current and annual information life a tax file or other accounting work. This is a list of what might be included. Of course not all items apply to every client and the list may vary over time. Thanks to accountant Ed Mendlowitz for assembling most of this list.

Engagement letters

Representation letters

IRS Form 3115 Change of Accounting Method

Crummey letters

Prior gift tax returns

Basis of property inherited, received or given as a gift

IRS Form706 showing the valuation amount

Documentation for not filing a Form 706 to claim the portability election

Final divorce agreements

Prenuptial agreements

Employment contracts

Employment severance payment documentation

Stock option information for incentive and nonqualified plans

Restricted stock details

Section 83b elections

Deferred compensation agreements

Alternative minimum tax credit backup

Stock and business ownership basis calculations

Installment sales basis calculations and copies of actual notes

Section 754 basis calculations

Schedules of carryover amounts

Partnership, buy-sell, members’ agreements and similar agreements

Real estate closing documents for real estate that client owns

Business valuations and appraisals

Closing contracts for a business that has been purchased

Purchase or sale of a business price allocations including for intangibles

Built-in Gain S corporation conversion valuation

Appraisals of charitable gifts

Tax opinions for ongoing or long-lasting transactions

Private letter rulings

Tax audit closing letters

Estate tax returns closing letters

Financial plans

Estate plans

IRA or other retirement plan basis calculation backup

Corporate minutes documenting tax issues

Client business ownership information

Ownership transfers of business or property interests

S elections

Not-for-profit approval from IRS and individual states

Opinions as to taxability of transactions for state tax purposes

Copies of clients’ wills

Copies of designation of beneficiary forms

Copies of trust agreements where client is a grantor, trustee or beneficiary

Evidence of termination of grantor trust status of a trust

Any powers of appointments in favor of client

Powers of attorney client executed

Life insurance policies

Life insurance trust documents

Private letter tax rulings

1031 basis and backup documentation

1035 basis and backup documentation

Documents client asks accountant to save

This may seem like a lot of documentation but today’s secure online document management systems make it an easily manageable situation. The toughest part, it seems, is determining which documents are applicable in your specific situation.

See the article “How Long Should I Keep Tax Records?” for more information on retention of your own financial records.

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Opinions expressed are the solely those of the author and do not represent the position of any other person, company or entity mentioned in the article. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Tony Novak operates as an independent adviser under the trademarks “Freedom Benefits“, “OnlineAdviser” and “OnlineNavigator” but is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier. He has no financial position in any stocks mentioned. Novak does work as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to other companies including the companies listed in the articles on this web site.

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