How to terrify just about anyone: Tell them their taxes are being audited.
Even worse: When their books and records are a mess. (Or maybe even non-existent.)
Every number could be scrutinized. That means documentation must be produced to support the amount of each expense and the business purpose of the item.
Some of us are meticulous in our documentation, but if you are like most taxpayers, you have pockets of misplaced or destroyed data. Even worse, you may be in a situation where documentation was completely destroyed by a fire or flood. If you don’t have documentation, does that mean your deductions are automatically disallowed? Not necessarily.