I have receipts I used in preparing my taxes (donations to charity,
1099 forms, etc) and often they are on a regular-sized sheet of paper.
 I also save year-end statements from brokers showing at what price I
purchased shares since I'll need this info to calculate gains down the
road.

I have a safe-deposit box but it's getting pretty full with all these
pieces of paper.  I was thinking about photocopying them and using the
machine to do a 4:1 reduction so that 1 2-sided piece of paper would
hold the contents of 8 single-sided sheets of paper.

My question is whether this would be acceptable to the IRS if I was
ever audited and asked to provide receipts for my calculations.   I
looked into record-keeping and all I can find is discussion of how
long to keep receipts, but nothing that says whether they have to be
the originals or not.

Would reduced-size copies of receipts be acceptable to the IRS in an audit?

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Request for Question Clarification by gregaw-ga on 22 Aug 2006 07:14 PDT

I also could not find anything about reduced size copies being
acceptable or not.  Copies seem to be acceptable, but whether it would
be a good idea to shrink them or not still remains to be seen.

I looked at the laws concerning electronic storage of such documents
and it is allowed and even encouraged:
http://www.irs.gov/newsroom/article/0,,id=157643,00.html
"Take Advantage of Paperless Recordkeeping"

The main emphasis is on being able to reproduce the document. 
Scanning and being able to print it again gives you a high quality
reproduction of that document.  I don't think you would get that some
quality by shrinking it on a copy machine and then blowing it back up
again.

In my opinion if you are looking to conserve space you should scan
these documents and store them on your PC with a full backup copy (or
two) stored elsewhere, like at your safe deposit box.

Oh, the joys of tax laws!

I haven't found any references to copies of reduced size, but this may
be of interest:

"Using E-Mail and Fax to Substantiate Business Deductions
As the number of paperless transactions increases, substantiation
takes on a new meaning. The IRS addressed this issue in private letter
ruling 9805007, in which an employer wanted to know whether e-mail or
fax communications constituted adequate documentation for a business
expense deduction under IRC sections 62 and 274.

'Ticketless travel' is the paperless transaction at issue. The
scenario involves an employee making travel arrangements through a
travel agent, who books a flight electronically and either faxes or
e-mails the employee an itinerary and receipt; the employee does not
receive a paper ticket or paper receipt. The employee then submits a
copy of the fax or e-mail message with an expense report for
reimbursement.

In the ruling, the IRS concluded that such communications do satisfy
the substantiation requirements of sections 62 and 274. The only
requirement is that the documentary evidence for travel expenses,
including airfare, establish the amount, date, place and business
character of the expenditure. The regulations do not require original
documents or prohibit documentary evidence in the form of fax,
photocopies or electronic messages. Thus, both the fax and e-mail
messages are sufficient substantiation."

http://www.aicpa.org/PUBS/jofa/sept1999/knight.htm