How to Prepare for and Avoid an Audit
The best way to prepare for an audit is to have a preparer who is capable of handling the return with the IRS before the audit gets elevated. The primary advantage of using a CPA or an Enrolled Agent to prepare your tax return is that the same team that handles the preparation of the return can represent you if you are audited. This allows the CPA or the EA to build your file to support the return with a potential audit in mind.
When your preparer provides the IRS with all the supporting documentation necessary to satisfy the IRS' requests, this can go a lot further than elaborate arguments at stage one of an audit... and the main goal for stage one of the audit is to have stage one of the audit be the final stage of the audit.