SECTION 7. RECORD KEEPING

Section 6001 provides that every person liable for any tax imposed by the Code, or for the collection thereof, must keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary may from time to time prescribe. The books or records required by § 6001 must be kept at all times available for inspection by authorized internal revenue officers or employees, and must be retained so long as the contents thereof may become material in the administration of any internal revenue law. Section 1.6001–1(e). In order to satisfy the record keeping requirements of § 6001 and the regulations thereunder, a taxpayer that changes to the track maintenance allowance method should maintain records substantiating all aspects of entitlement to the deduction, including, but not limited to, the following:

.01 The Form R-1 and adequate documentation to verify the taxpayer’s information included in the Form R-1. This documentation includes reports and workpapers of independent auditors with respect to agreed upon procedures, as submitted to the STB pursuant to Ex Parte 460, Certification of Railroad Annual Report R-1 by Independent Accountant;

.02 Work papers or reports that identify and extract the taxpayer’s costs for new track structure, including costs to rehabilitate or improve newly acquired or previously abandoned track structure;

.03 Work papers or reports that identify and extract the taxpayer’s assigned value of relay materials - Schedule 330 from the Schedule 330;

.04 Work papers or reports that identify and extract the taxpayer’s assigned value of relay materials - Schedule 410 and salvage material credits - Schedule 410 from the Schedule 410; and

.05 Work papers or reports that identify the amounts included in Account 735 for the taxpayer’s removal costs.