[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.57-5]

[Page 517-518]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.57-5  Records to be kept.

    (a) In general. The taxpayer shall have available permanent records 
of all the facts necessary to determine with reasonable accuracy the 
amounts described in Sec. 1.57-1. Such records shall include:
    (1) In the case of amounts described in paragraph (a) of Sec. 1.57-
1: the amount and nature of indebtedness outstanding for the taxable 
year and the date or dates on which each such indebtedness was incurred 
or renewed in any form; the amount expended for property held for 
investment during any taxable year during which such indebtedness was 
incurred or renewed; and the manner in which it was determined that 
property was or was not held for investment.
    (2) In the case of amounts described in paragraphs (b), (c), (d), 
(e), and (h) of Sec. 1.57-1:
    (i) The dates, and manner in which, the property was acquired and 
placed in service,
    (ii) The taxpayer's basis on the date the property was acquired and 
the manner in which the basis was determined,
    (iii) An estimate of the useful life (in terms of months, hours of 
use, etc., whichever is appropriate) of the property on the date placed 
in service or an estimate of the number of units to be produced by the 
property on the date the property is placed in service, whichever is 
appropriate, and the manner in which such estimate was determined,
    (iv) The amount and date of all adjustments by the taxpayer to the 
basis of the property and an explanation of the nature of such 
adjustments, and
    (v) In the case of property which has an adjusted basis reflecting 
adjustments taken by another taxpayer with respect to the property or 
taken by the taxpayer with respect to other property, the information 
described in paragraph (a)(2)(i) through (iv) of this section, with 
respect to such other property or other taxpayer.
    (3) In the case of amounts described in paragraph (f) of Sec. 1.57-
1, the fair market value of the shares of stock at the date of exercise 
of the option and the option price and the manner in which each was 
determined.
    (4) In the case of amounts described in paragraph (g) of Sec. 1.57-
1, the amount of debts written off and the amount of the loans 
outstanding for the taxable year and the 5 preceding taxable years or 
such shorter or longer period as is appropriate.
    (b) Net operating losses. The taxpayer shall have available 
permanent records for the first taxable year in which a portion of a net 
operating loss was attributable to items of tax preference (within the 
meaning of Sec. 1.56A-2 (b)) and each succeeding taxable year in which 
there is a net operating loss or a net operating loss carryover a 
portion of which is so attributable. Such records shall include all the 
facts necessary to determine with reasonable accuracy the amount of 
deferred tax liability under section 56, including the amount of the net 
operating loss in each taxable year in which there are

[[Page 518]]

items of tax preference in excess of the minimum tax exemption (as 
determined under Sec. 1.58-1), the amount of the items of tax preference 
for each such taxable year, the amount by which each such net operating 
loss reduces taxable income in any taxable year, and the amount by which 
each such net operating loss is reduced in any taxable year.

[T.D. 7564, 43 FR 40479, Sept. 12, 1978, as amended by T.D. 8138, 52 FR 
15309, Apr. 28, 1987]