Replace missing documents and you'll reap big savings. By Mary Beth Franklin, Senior Editor February 28, 2006 There's an old saying that no job is complete until the paperwork is done. But at tax time, organizing your paperwork should come first so that you have the documentation you need to trim your tax bill. If some of that paperwork has gone missing, here's how to reconstruct the trail. You don't know the cost basis of your mutual funds. If you sell mutual fund shares that you've held for a year or more in a taxable account, you owe long-term capital-gains taxes on the profit, at a maximum rate of 15%. If you take a loss, you can use it to offset other investment gains or ordinary income. To calculate the gain or loss, you subtract your adjusted cost basis -- essentially the price you paid for the shares -- from the proceeds. But establishing that basis can get complicated. You probably bought shares at various prices over the years, and you may have reinvested dividends or paid taxes on distributions. All of those events increase your cost basis. If you haven't kept detailed records, get help from the mutual fund company. Fund companies are required to keep records for at least six years, and some hang on to them even longer. For more on calculating your cost basis, see IRS Publication 564, Mutual Fund Distributions. Research individual stocks' price history, including stock splits, at www.bigcharts.com. Advertisement You neglected to save home-improvement records. You can pocket up to $250,000 in tax-free profit from the sale of your home (or $500,000 in the case of married couples filing jointly) as long as you have lived in the house for at least two of the five years preceding the sale. But the big run-up in home prices over the past few years may mean some of your profits are taxable. To reduce your taxable profit, you can boost the cost basis of your home to reflect expenses you incurred in buying, selling or improving it. For a list of allowable expenses, see IRS Publication 523, Selling Your Home. If you can't find your receipts, reconstruct your costs by gathering canceled checks, old credit-card statements, before-and-after photos or a signed note from a contractor. A tax auditor could still question your documentation, but you have a dandy fallback: the so-called Cohan Rule, named for Yankee Doodle Dandy composer George M. Cohan. Cohan was one of the first taxpayers audited by the IRS, after many of his show-business-related expenses were disallowed for lack of substantiating records. His lawyers argued -- successfully -- that the busy showman had offered credible evidence for his expense approximations. Although you're not automatically entitled to estimate your expenses, tax attorney Fred Daily, author of Tax Savvy for Small Business, says it can't hurt to cite the Cohan Rule. But be prepared to compromise, says Daily. Advertisement You made nondeductible IRA contributions. After Congress limited tax-deductible IRA contributions beginning in 1987, many investors continued to add after-tax money to their retirement accounts but failed to file a Form 8606 documenting those contributions. You need that paperwork to calculate what proportion of your eventual withdrawals is tax-free. Not to worry, says IRA expert Ed Slott (www.irahelp.com). Slott suggests that you fill out the form now, tallying your cumulative contributions on line 2 to establish your basis, and file it with your 2006 tax return. Tax-prep software will carry the information forward. Use old brokerage, bank or mutual-fund statements to document your contributions, and match them up with old tax records to show that you didn't take a deduction for IRA contributions. File Form 4506 to request copies of past returns at $39 a pop.