Property Transactions: Source Documentation

Question 1

What is the basic definition of GROSS RECEIPTS?

Answer 1

Income the taxpayer receives as a business. Supporting documents should show amount and source.

Question 2

Examples of documents evidencing GROSS RECEIPTS?

Answer 2

(1) Sales Invoices
(2) Deposit Information
(3) Cash Register Tapes
(4) Forms 1099-MISC

Question 3

Basic definition of PURCHASES?

Answer 3

Items taxpayer buys to resell to customers.

Question 4

What should PURCHASING documents identify?

Answer 4

(1) Payee
(2) Amount paid
(3) Proof of payment
(4) Date incurred

Question 5

Examples of documents evidencing PURCHASING?

Answer 5

(1) Vendor Invoices
(2) Credit card receipts and statements
(3) Canceled checks or other documents reflecting proof of payment or electronic funds transferred

Question 6

Basic definition of EXPENSES?

Answer 6

Cost taxpayers incur to carry on operations of business.

Question 7

Examples of documents evidencing EXPENSES?

Answer 7

Same as for purchases.

Question 8

Important information to track regarding ASSETS?

Answer 8

(1) Date acquired and placed in service
(2) Purchase price
(3) Cost of improvements
(4) Deductions taken for depreciation
(5) Date of disposition
(6) Sales Price
(7) Expenses of Sale