Per the IRS records the number of audits on individual tax returns is on the rise. The good news (if you can consider it that) is that a majority of the increase in audits is seen in correspondence audits. Correspondence audits are done through the mail. This is a good thing is the issue in question is easily explainable. The correspondence audit isn’t a good audit if you are missing documentation, the documentation would file volumes of books or you need a conversation to explain your situation.
You can see the history of audits at http://www.trac.syr.edu/tracirs/newfindings/auditinddata.php
Keep all of your tax related documents for at least 5 years. I recommend business and landlords keep their documentation for 7 years. If you own rental property then you should keep your documentation regarding the property purchase and any additional capital improvements for at least 5 years after you sell the property. Yes that could be a long time if you have held the property for more than 10 years. The IRS has the legal authority to audit the purchase price of that property going back to the original purchase date.
Call us if you have questions specific to your circumstance.