IRS offers resources for reconstructing lost financial records, documenting claims
Reconstructing records after a disaster may be essential for tax purposes, securing federal assistance or insurance reimbursement. Records needed to prove loss may have been damaged or destroyed in a casualty. While it may not be easy, restoring financial data as quickly as possible may be essential for proving loss for tax purposes.
The IRS has disaster loss workbooks for individuals and businesses to help compile a room-by-room list of belongings or business equipment. This will help you recall and prove the market value of items for insurance and casualty loss claims.
Some potential sources of information to reconstruct financial data:
Inventories: Get copies of invoices from suppliers. Whenever possible, the invoices should date back at least one calendar year.
Income: Get copies of bank statements. The deposits should closely reflect what the sales were for any given time period. Obtain copies of last year’s federal, state and local tax returns including sales tax reports, payroll tax returns and business licenses (from city or county). These will reflect gross sales for a given time period.
Real property: Contact the title company, escrow company or bank that handled the purchase to obtain copies of escrow papers. Your real estate broker may also be able to help. Check with your mortgage company for copies of any appraisals or other information they may have about cost or fair market value. Also check with appraisal companies to locate a library of old multiple listing books. These can be used for “comps” to establish a basis or fair market value. Most insurance policies also list the value of the building to establish a base figure for replacement value insurance.
Furniture and fixtures: Sketch an outline of the inside and outside of the business location. Then start to fill in the details of the sketches. Document what equipment was where, and, if you are a retail establishment, where the products/inventory were located. Outside the building, document shrubs, parking, signs, awnings, etc. If you purchased an existing business, go back to the broker for a copy of the purchase agreement. This should detail what was acquired. If the building was constructed for you, contact the contractor for building plans or the county/city planning commissions for copies of any plans.
General financial information: The IRS can provide valuable financial data. Immediately after a casualty, you can request a copy of a return and all attachments (including Form W-2) by using Form 4506, Request for Copy of Tax Return (PDF). If you just need information from your return, you can order a transcript by calling (800) 829-1040 or using Form 4506-T, Request for Transcript of Tax Return (PDF). There is no fee for a transcript. Transcripts are available for the current year and returns processed in the three prior years.
The IRS has a self-study section of its web site which includes Disaster Assistance. One section includes record reconstruction.