Article Date:
May 2021


Word Count:
1672

 

 

Disaster Strikes: Next Trouble, an IRS Audit


Your office burns to the ground in a fire.

 

You barely escape with your life. Everything in your office is destroyed, including all of your paper records and computer systems.

 

You need to reconstruct your accounting and tax records not only to file your taxes (including claims for casualty losses), but also to file insurance claims, bill clients, pay bills, obtain loans, deal with federal and state audits, determine business cash flow and solvency, and otherwise continue in business.

 

The first income tax reason for re-creating your records right away is that you can qualify to claim the casualty loss on a prior-year tax return and obtain a quick tax refund, as explained in Deducting Business Casualty Losses: You Don’t Need a Disaster.

 

The second tax reason is that you have to file a tax return.

 

And because you lost your business records in the fire, your prior tax returns and the one you’re about to file are in serious trouble, because the fire destroyed your proof.

 

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