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I'm assuming we need to keep documents that value the stock back on that date (or the link posted below seems helpful). - Yes that is correct. I am assuming that she owned the stock jointly with her husband before it went to the Testamentary trust so I would keep all documents relevant to the stock even prior to the date her husband passed. (Year end summary statements should suffice, no need to keep the monthly statements) per the IRS (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/IRS-Audit-FAQs#keypoint7)
"How long should the records related to a business or other long-term asset be kept?In the case of an asset, records related to the asset should generally be kept for as long as you have the asset plus three years. If the asset was exchanged, the basis for the new asset may include the exchanged asset so the records for both assets will need to be retained until the new asset is disposed plus three years from the file date of the tax return for the year of disposition."
Regarding her tax returns and records. She can get rid of everything prior to 2005. The IRS statute of limitations expires after 7 years so there is no need to keep these documents. If however, there is fraud in the returns (i.e. deducting expenses that never existed or under reporting income with the intent to defraud the government) then there is no statute of limitations and the IRS can go back to whatever year they like so long as they have proof or reasonable knowledge of a fraud. Note that the IRS only has three years to give you a refund, three years to audit your tax return, and ten years to collect any tax due. Together, these laws are called the statute of limitations. If you she becomes under audit within three years of filing then the IRS can only go back to 2005 to open up returns for exam. Once a return is filed there is a 7 year statute of limitations on it for the IRS to examine it (unless fraud exists).
See link here for more information on this - http://taxes.about.com/od/backtaxes/qt/statute_limits.htm
I trust this provides the clarity you were looking for. Please let me know if you have any further questions.
Just following up. Please let me know if you have any further questions. If I have answered your questions and you are satisfied please accept or rate the answers. If not please let me know where I can assist further.
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