I have a tax audit question?

Question

In June of 2002 I was laid off from a major oil and gas company in Houston. I recieved a prety good severance package from which I took out $10,000 cash put it in an envelop and tucked it away. After spending the rest of 2002 and all of 2003 looking for a stable job and not finding one, in 2004 I decided to pull out the money and try my hand at starting a company doing website development and consulting. I was up to my neck in credit cards, so decided "NO MORE CREDIT CARDS", and went cash and carry, for the most part. Used my amex, and debit card some but not much. I needed computer equipment, since the company had always provided one, so went to swap meets, garage sales, etc and bought used equipment. Most of my receipts are those you get from a supply store. Everything I bought was cash. I closed the company at the end of 2005 when the money ran out, now I am being audited for 2004. What can I expect in the audit? What will they be looking for? I can supply more info if needed

Answer 1

Can you prove how you paid for food and shelter? If so, don't sweat it - unless there's something you're not telling us, of course....

Answer 2

Lay your cards on the table. You have a trail of where the money came from and how you spent it in an attempt to have a viable business and it went bust. Life in america, yaddah. Strangely enough, most auditors are human beings also; and upon going through your receipts and records will just be thankful that "there, but for the grace of god, go I". Here in Montana most people lose their money trying to go into agriculture; which is almost as bad as being in the trucking business.

Answer 3

a) No any requirement of Statutory Audit for a Proprietory enterprise. b) Tax Audit is ought to. Becuase you're man or woman and your Turnover is better than 40L united states44AB, you document 2 set of stability sheet & p&l a/c or document with combide. c) TAN would be proper from 01.04.2009.