Shredding?

[progree]

5. You have to keep anything that documents the basis of your capital gains assets for

something recently sold --

e.g. you bought some stock 20 years ago and sold it this year. Your capital gains tax is based on what you sold it for minus what you paid for it. You can be asked to document what you bought it for, even if you bought it 20 years ago. The 3 year and 7 year stuff doesn't apply to that. But 7 years after the sale I don't think there is any worry.

Especially tricky is anything that involves reinvestment of dividends or other distributions -- each reinvestment is new shares of the asset with its own basis ... people who don't keep track of that end up paying capital gains taxes on the distributions they already paid taxes on.

Depreciation ... another one to look out for.