What do you do if your records were distroyed?

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Sandy Botkin
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Lower Your Taxes
What do you do if you have lost or destroyed records?You can use the desperation , otherwise known as reconstruction method. IRS and CRA allows you to reconstruct your records if they were lost due to circumstances beyond your control such as flood, fire, earthquake,theft. You can’t reconstruct records if they were lost due to your own carelessness or negligence

Practically speaking, most tax auditors will let you reconstruct records if you use a reasonable basis for the reconstruction. You just can’t pull the numbers out of thin air. For example, if you keep a appointment book, you probably could write down the estimated mileage next to the appointments. However, don’t use the “finger in the wind” approach, where you estimate your business mileage without a log or some backup support. You will be hit with substantial penalties for trying to pull the wool over IRS’s and CRA’s eyes.

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