b'shipandnosanctionsofanykindwill(orcan)betakenagain st members whochoosetogivelongerguarantees.Indeed,wehavenowayofdetermin-"\'-ingtheactionsofourmembersi\'nthisregard.Yous houldnotenterinto anyagreementorunderstandingwithyourcompetito~sregardingguarantees. Todosoisarestraintoftradeviolativeoffederal(andinsomecases, state)anti-trustlaws.Someloca-1associationsofroofingc ontractors havelearnedthisthehardway,asevidencedbyanti-trustconsentdecrees enteredincitiessuchasPhiladelphia,MilwaukeeandBuffalo. WHATTODOIFTHEIRSPICKSYOU IftheIRSselectsyourreturnforexamination,don\'tpanic. Informyouraccountantortaxadvisoroftheupcomingauditandthe areastheAgenthasselected.Reviewyourbooksandrecordsand back-updocumentation,especiallyintheareasoftravelandentertainment,inventorymethods,depreciation,etc.toseeiftheyconformwiththecurrentIRSrequirements. If youarepreparedtoshowtheauditorbooksandrecordsand properdocumentation,theauditshouldgomuchsmootherthanyou mightfirstanticipateandquitepossiblytheAgentwillfindno adjustment.Thekeytoanysuccessfuldefenseofataxreturnis beingprepared. DefendingtheInformationontheTaxReturn Onceataxreturnhasbeenselectedforanaudit,thetaxpayer mustbeabletodefendwhatappearsonthatreturn.Adequate recordsareessentialnotonlyforthepreparationofanaccurate incometaxreturn,butalsoforthegovernmentintestingthe accuracyandsufficiencyofthatreturn.Consequently,the InternalRevenueCodeprovidesthatanypersonrequiredtofile areturnwithrespecttoincome"shallkeepsuchpermanentbooks ofaccountorrecords,includinginventories,asaresufficient toestablishtheamountofgrossincome,deductions,credits,or othermattersrequiredtobeshown."Inaddition,t heCoderequiresthattheserecordsberetainedsol ongasthecontentsmay becomematerialintheadministrationofanyinternalrevenuelaw. Lackofrecordsorinadequaterecordsmayresultinanincreased taxliabilityaswellaspossiblepenaltiesfornegligenceoreven fraud.Criminalprosecutionusuallyarisesfromsevereabuseof thelaw.Morefrequentlyimposedisthe5%penaltyfornegligence or"intentionaldisregardofrulesandregulationsbutwithout intenttodefraud."Wherebooksandrecordshavebeenadequateto disclosethefacts,thecourtshavebeenunwillingtoattributethe understatementoftaxtonegligence. FormofRecordkeeping Noparticularformormethodisrequiredforkeepingrecords. Theregulationsprescribethattheformusedmustproduceaccurate - recordsandmustenabletheServicetodeterminewhetheraliabil ity fortaxisincurredand,ifso,theamountofthetax .Accordingly, broaddiscretionisgiventaxpayerswithrespecttothemethodof keepingtheserecords,eachtaxpayerbeingpermittedtoemploythe'