Good Bookkeeping Saves Client $40,000 in Deductions

One of our clients was selected for an audit by the IRS because of an erroneously filed 1099 by the state. When the examiner asked for receipts for items paid for with cash the client discovered he could not locate them. The IRS examiner proposed to disallow all cash payment deductions. When it was pointed out that all cash payments were accounted for in a similar manner that bank and credit card transactions are, which included dates paid, amounts, and vendor names, the IRS agent allowed the deductions although the receipts could not be produced.  This is one case where good bookkeeping and reconciled accounts saved the client $40,000 in what would have been disallowed deductions because of the credibility of Patriot Tax and Bookkeeping,Inc.’s  accounting systems.