In special cases, the tax court allows deductions without records. For example: in a 1994 decision, the court rejected the IRS’s disallowance for lack of substantiation of deductions claimed by Marvin Eugene Huff. Marvin introduced evidence that a tornado destroyed a storage shed in which he had placed the records of his pulpwood logging business.
The court agreed with him that a tornado was, “an event beyond his control” and cited his credible testimony about the expenses in issue. Accordingly, it concluded that the disputed deductions were reasonable in light of the nature of his business.
What Does This Mean For Me?
To simplify, it means that if you are in extenuating circumstances and you lose the documentation you need to make a deduction, you can still file the deduction.
Obviously, this can get a little complicated, so you’ll need some help. But that’s where we come in! We’re more than happy to help you with any lost records, tax issues, book-keeping, or any other accounting related issue you may be having.