Securing tax deductions: when documents are lost

In a perfect world everyone would have every receipt from every transaction that resulted in a tax deduction from the past 7 years. However, in reality things happen; people move, get divorced or disaster strikes, resulting in the loss of documentation. 

The tax court case of Powers v. Commissioner, T.C. Summ., Op. 2013-106 paints a similar picture. Ms. Powers was a real-estate agent in Portland, OR where she incurred several unreimbursed employee expenses due to travel. Ms. Power kept adequate records, but lost access to the records after losing her job. 

The IRS originally denied the unreimbursed employee expenses claimed because Ms. Powers did not have the proper documentation. Ms. Powers then decided to take her case to court where the court held that she could claim the deduction because she was able to prove that the logs were accurate by documenting expenses incurred during the travels like gas receipts. 

For more information see The American Institute of Professional Bookkeepers Volume 10: Issue 3.