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1040x irs Publication 559 - Additional Material Prev Up Next Home More Online Publications
Understanding your CP259F Notice
We're sending you this notice because our records indicate you did not file a required Form 5227, Split-Interest Trust information Return.
Printable samples of this notice (PDF)
Tax publications you may find useful
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Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.
You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).
What you need to do
- Disregard this notice if you have filed the return within the last four weeks using the same name and EIN listed on the notice.
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Answers to Common Questions
Which organizations must file a Form 5227?
Form 5227 must be filed by all charitable remainder trusts described in section 664; all pooled income funds described in section 642(c)(5); and all other trusts such as charitable lead trusts that meet the definition of a split-interest trust under section 4947(a)(2), unless certain exceptions apply (see General Instructions of the Form 5227 Instructions).
When is Form 5227 due?
Form 5227 is due by April 15 of each year. If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file the return on the next business day. More information can be found at the Form 5227 Instructions.
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If you have questions and/or need help completing the form, please call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.
Where can I go for more information about tax-exempt organizations?
For more information on tax-exempt organizations see Tax Information for Charities & Other Non-Profits.
Tips for next year
Review the tax-exempt organization resources at Form 990 Resources and Tools for Exempt Organizations.
Understanding your notice
Reading your notice
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Page Last Reviewed or Updated: 29-Mar-2014
The 1040x Irs
1040x irs 5. 1040x irs Recordkeeping Table of Contents How To Prove ExpensesWhat Are Adequate Records? What If I Have Incomplete Records? Separating and Combining Expenses How Long To Keep Records and Receipts Examples of Records If you deduct travel, entertainment, gift, or transportation expenses, you must be able to prove (substantiate) certain elements of expense. 1040x irs This chapter discusses the records you need to keep to prove these expenses. 1040x irs If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. 1040x irs You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan. 1040x irs These plans are discussed in chapter 6 under Reimbursements . 1040x irs How To Prove Expenses Table 5-1 is a summary of records you need to prove each expense discussed in this publication. 1040x irs You must be able to prove the elements listed across the top portion of the chart. 1040x irs You prove them by having the information and receipts (where needed) for the expenses listed in the first column. 1040x irs You cannot deduct amounts that you approximate or estimate. 1040x irs You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. 1040x irs You must generally prepare a written record for it to be considered adequate. 1040x irs This is because written evidence is more reliable than oral evidence alone. 1040x irs However, if you prepare a record on a computer, it is considered an adequate record. 1040x irs What Are Adequate Records? You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. 1040x irs You should also keep documentary evidence that, together with your record, will support each element of an expense. 1040x irs Documentary evidence. 1040x irs You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses. 1040x irs Exception. 1040x irs Documentary evidence is not needed if any of the following conditions apply. 1040x irs You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. 1040x irs ( Accountable plans and per diem allowances are discussed in chapter 6. 1040x irs ) Your expense, other than lodging, is less than $75. 1040x irs You have a transportation expense for which a receipt is not readily available. 1040x irs Adequate evidence. 1040x irs Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense. 1040x irs For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information. 1040x irs The name and location of the hotel. 1040x irs The dates you stayed there. 1040x irs Separate amounts for charges such as lodging, meals, and telephone calls. 1040x irs A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information. 1040x irs The name and location of the restaurant. 1040x irs The number of people served. 1040x irs The date and amount of the expense. 1040x irs If a charge is made for items other than food and beverages, the receipt must show that this is the case. 1040x irs Canceled check. 1040x irs A canceled check, together with a bill from the payee, ordinarily establishes the cost. 1040x irs However, a canceled check by itself does not prove a business expense without other evidence to show that it was for a business purpose. 1040x irs Duplicate information. 1040x irs You do not have to record information in your account book or other record that duplicates information shown on a receipt as long as your records and receipts complement each other in an orderly manner. 1040x irs You do not have to record amounts your employer pays directly for any ticket or other travel item. 1040x irs However, if you charge these items to your employer, through a credit card or otherwise, you must keep a record of the amounts you spend. 1040x irs Timely-kept records. 1040x irs You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence. 1040x irs A timely-kept record has more value than a statement prepared later when generally there is a lack of accurate recall. 1040x irs You do not need to write down the elements of every expense on the day of the expense. 1040x irs If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely-kept record. 1040x irs If you give your employer, client, or customer an expense account statement, it can also be considered a timely-kept record. 1040x irs This is true if you copy it from your account book, diary, log, statement of expense, trip sheets, or similar record. 1040x irs Proving business purpose. 1040x irs You must generally provide a written statement of the business purpose of an expense. 1040x irs However, the degree of proof varies according to the circumstances in each case. 1040x irs If the business purpose of an expense is clear from the surrounding circumstances, then you do not need to give a written explanation. 1040x irs Example. 1040x irs If you are a sales representative who calls on customers on an established sales route, you do not have to give a written explanation of the business purpose for traveling that route. 1040x irs You can satisfy the requirements by recording the length of the delivery route once, the date of each trip at or near the time of the trips, and the total miles you drove the car during the tax year. 1040x irs You could also establish the date of each trip with a receipt, record of delivery, or other documentary evidence. 1040x irs Confidential information. 1040x irs You do not need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. 1040x irs However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense. 1040x irs What If I Have Incomplete Records? If you do not have complete records to prove an element of an expense, then you must prove the element with: Your own written or oral statement containing specific information about the element, and Other supporting evidence that is sufficient to establish the element. 1040x irs If the element is the description of a gift, or the cost, time, place, or date of an expense, the supporting evidence must be either direct evidence or documentary evidence. 1040x irs Direct evidence can be written statements or the oral testimony of your guests or other witnesses setting forth detailed information about the element. 1040x irs Documentary evidence can be receipts, paid bills, or similar evidence. 1040x irs If the element is either the business relationship of your guests or the business purpose of the amount spent, the supporting evidence can be circumstantial rather than direct. 1040x irs For example, the nature of your work, such as making deliveries, provides circumstantial evidence of the use of your car for business purposes. 1040x irs Invoices of deliveries establish when you used the car for business. 1040x irs Table 5-1. 1040x irs How To Prove Certain Business Expenses IF you have expenses for . 1040x irs . 1040x irs THEN you must keep records that show details of the following elements . 1040x irs . 1040x irs . 1040x irs Amount Time Place or Description Business Purpose Business Relationship Travel Cost of each separate expense for travel, lodging, and meals. 1040x irs Incidental expenses may be totaled in reasonable categories such as taxis, fees and tips, etc. 1040x irs Dates you left and returned for each trip and number of days spent on business. 1040x irs Destination or area of your travel (name of city, town, or other designation). 1040x irs Purpose: Business purpose for the expense or the business benefit gained or expected to be gained. 1040x irs Relationship: N/A Entertainment Cost of each separate expense. 1040x irs Incidental expenses such as taxis, telephones, etc. 1040x irs , may be totaled on a daily basis. 1040x irs Date of entertainment. 1040x irs (Also see Business Purpose. 1040x irs ) Name and address or location of place of entertainment. 1040x irs Type of entertainment if not otherwise apparent. 1040x irs (Also see Business Purpose. 1040x irs ) Purpose: Business purpose for the expense or the business benefit gained or expected to be gained. 1040x irs For entertainment, the nature of the business discussion or activity. 1040x irs If the entertainment was directly before or after a business discussion: the date, place, nature, and duration of the business discussion, and the identities of the persons who took part in both the business discussion and the entertainment activity. 1040x irs Relationship: Occupations or other information (such as names, titles, or other designations) about the recipients that shows their business relationship to you. 1040x irs For entertainment, you must also prove that you or your employee was present if the entertainment was a business meal. 1040x irs Gifts Cost of the gift. 1040x irs Date of the gift. 1040x irs Description of the gift. 1040x irs Transportation Cost of each separate expense. 1040x irs For car expenses, the cost of the car and any improvements, the date you started using it for business, the mileage for each business use, and the total miles for the year. 1040x irs Date of the expense. 1040x irs For car expenses, the date of the use of the car. 1040x irs Your business destination. 1040x irs Purpose: Business purpose for the expense. 1040x irs Relationship: N/A Sampling. 1040x irs You can keep an adequate record for parts of a tax year and use that record to prove the amount of business or investment use for the entire year. 1040x irs You must demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year. 1040x irs Example. 1040x irs You use your car to visit the offices of clients, meet with suppliers and other subcontractors, and pick up and deliver items to clients. 1040x irs There is no other business use of the car, but you and your family use the car for personal purposes. 1040x irs You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. 1040x irs Invoices and bills show that your business use continues at the same rate during the later weeks of each month. 1040x irs Your weekly records are representative of the use of the car each month and are sufficient evidence to support the percentage of business use for the year. 1040x irs Exceptional circumstances. 1040x irs You can satisfy the substantiation requirements with other evidence if, because of the nature of the situation in which an expense is made, you cannot get a receipt. 1040x irs This applies if all the following are true. 1040x irs You were unable to obtain evidence for an element of the expense or use that completely satisfies the requirements explained earlier under What Are Adequate Records . 1040x irs You are unable to obtain evidence for an element that completely satisfies the two rules listed earlier under What If I Have Incomplete Records . 1040x irs You have presented other evidence for the element that is the best proof possible under the circumstances. 1040x irs Destroyed records. 1040x irs If you cannot produce a receipt because of reasons beyond your control, you can prove a deduction by reconstructing your records or expenses. 1040x irs Reasons beyond your control include fire, flood, and other casualties. 1040x irs Table 5-2. 1040x irs Daily Business Mileage and Expense Log Name: Odometer Readings Expenses Date Destination (City, Town, or Area) Business Purpose Start Stop Miles this trip Type (Gas, oil, tolls, etc. 1040x irs ) Amount Weekly Total Total Year-to-Date Separating and Combining Expenses This section explains when expenses must be kept separate and when expenses can be combined. 1040x irs Separating expenses. 1040x irs Each separate payment is generally considered a separate expense. 1040x irs For example, if you entertain a customer or client at dinner and then go to the theater, the dinner expense and the cost of the theater tickets are two separate expenses. 1040x irs You must record them separately in your records. 1040x irs Season or series tickets. 1040x irs If you buy season or series tickets for business use, you must treat each ticket in the series as a separate item. 1040x irs To determine the cost of individual tickets, divide the total cost (but not more than face value) by the number of games or performances in the series. 1040x irs You must keep records to show whether you use each ticket as a gift or entertainment. 1040x irs Also, you must be able to prove the cost of nonluxury box seat tickets if you rent a skybox or other private luxury box for more than one event. 1040x irs See Entertainment tickets in chapter 2. 1040x irs Combining items. 1040x irs You can make one daily entry in your record for reasonable categories of expenses. 1040x irs Examples are taxi fares, telephone calls, or other incidental travel costs. 1040x irs Meals should be in a separate category. 1040x irs You can include tips for meal-related services with the costs of the meals. 1040x irs Expenses of a similar nature occurring during the course of a single event are considered a single expense. 1040x irs For example, if during entertainment at a cocktail lounge, you pay separately for each serving of refreshments, the total expense for the refreshments is treated as a single expense. 1040x irs Car expenses. 1040x irs You can account for several uses of your car that can be considered part of a single use, such as a round trip or uninterrupted business use, with a single record. 1040x irs Minimal personal use, such as a stop for lunch on the way between two business stops, is not an interruption of business use. 1040x irs Example. 1040x irs You make deliveries at several different locations on a route that begins and ends at your employer's business premises and that includes a stop at the business premises between two deliveries. 1040x irs You can account for these using a single record of miles driven. 1040x irs Gift expenses. 1040x irs You do not always have to record the name of each recipient of a gift. 1040x irs A general listing will be enough if it is evident that you are not trying to avoid the $25 annual limit on the amount you can deduct for gifts to any one person. 1040x irs For example, if you buy a large number of tickets to local high school basketball games and give one or two tickets to each of many customers, it is usually enough to record a general description of the recipients. 1040x irs Allocating total cost. 1040x irs If you can prove the total cost of travel or entertainment but you cannot prove how much it cost for each person who participated in the event, you may have to allocate the total cost among you and your guests on a pro rata basis. 1040x irs To do so, you must establish the number of persons who participated in the event. 1040x irs An allocation would be needed, for example, if you did not have a business relationship with all of your guests. 1040x irs See Allocating between business and nonbusiness in chapter 2. 1040x irs If your return is examined. 1040x irs If your return is examined, you may have to provide additional information to the IRS. 1040x irs This information could be needed to clarify or to establish the accuracy or reliability of information contained in your records, statements, testimony, or documentary evidence before a deduction is allowed. 1040x irs THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Table 5-3. 1040x irs Weekly Traveling Expense and Entertainment Record From: To: Name: Expenses Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total 1. 1040x irs Travel Expenses: Airlines Excess Baggage Bus – Train Cab and Limousine Tips Porter 2. 1040x irs Meals and Lodging: Breakfast Lunch Dinner Hotel and Motel (Detail in Schedule B) 3. 1040x irs Entertainment (Detail in Schedule C) 4. 1040x irs Other Expenses: Postage Telephone & Telegraph Stationery & Printing Stenographer Sample Room Advertising Assistant(s) Trade Shows 5. 1040x irs Car Expenses: (List all car expenses - the division between business and personal expenses may be made at the end of the year. 1040x irs ) (Detail mileage in Schedule A. 1040x irs ) Gas, oil, lube, wash Repairs, parts Tires, supplies Parking fees, tolls 6. 1040x irs Other (Identify) Total Note: Attach receipted bills for (1) ALL lodging and (2) any other expenses of $75. 1040x irs 00 or more. 1040x irs Schedule A – Car Mileage: End Start Total Business Mileage Schedule B – Lodging Hotel or Motel Name City Schedule C – Entertainment Date Item Place Amount Business Purpose Business Relationship WEEKLY REIMBURSEMENTS: Travel and transportation expenses Other reimbursements TOTAL How Long To Keep Records and Receipts You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. 1040x irs Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. 1040x irs A return filed early is considered filed on the due date. 1040x irs For a more complete explanation of how long to keep records, see Publication 583, Starting a Business and Keeping Records. 1040x irs You must keep records of the business use of your car for each year of the recovery period. 1040x irs See More-than-50%-use test in chapter 4 under Depreciation Deduction. 1040x irs Reimbursed for expenses. 1040x irs Employees who give their records and documentation to their employers and are reimbursed for their expenses generally do not have to keep copies of this information. 1040x irs However, you may have to prove your expenses if any of the following conditions apply. 1040x irs You claim deductions for expenses that are more than reimbursements. 1040x irs Your expenses are reimbursed under a nonaccountable plan. 1040x irs Your employer does not use adequate accounting procedures to verify expense accounts. 1040x irs You are related to your employer as defined under Per Diem and Car Allowances , in chapter 6. 1040x irs Reimbursements , adequate accounting , and nonaccountable plans are discussed in chapter 6. 1040x irs Examples of Records Table 5-2 and Table 5-3 are examples of worksheets which can be used for tracking business expenses. 1040x irs Prev Up Next Home More Online Publications