Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Business; Form 1040, Line 12


Reconstructing Records

Make adequate inquiries to be satisfied that the taxpayer is carrying on a business and that the income and expenses reported on the tax return are substantially correct and complete.

You may help a taxpayer with simple record reconstruction. Assisting the taxpayer in reconstruction will help teach the taxpayer about recordkeeping. Extensive record reconstruction should be performed by the taxpayer or a paid preparer. If you are not satisfied with the accuracy of the reconstructed records, you have the right to decline to prepare the return. See your Site Coordinator for guidance.

The goal of record reconstruction is to use available documentation to develop a sound and reasonable estimate of the taxpayer's business income and expenses to support the Schedule C/C-EZ prepared. When reconstructing records, you can use such tools as:

  • Appointment books or calendars
  • Online map tools
  • IRS standard allowances
  • Checkbooks
  • Cancelled checks
  • Bank or credit card statements
  • Lists of regular clients
  • Partial receipts or sales tax records
  • Cell phone records, call history, or computer logs
  • Prior year returns