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.

    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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