I am filing a tax return based on estimates, including real estate transactions and gains / losses. I do not have the original

Asked about 2 years ago - San Francisco, CA

records so basing calculations on estimates from public record, and recollection of others as to costs, basis, etc. Is it wise to file this based on estimates, since the returns are several years overdue? If we wait and file nothing, I fear criminal or very damaging repercussions. So filing based on estimates and then amend down the road if original documentation becomes available?

Attorney answers (3)

  1. Steven S Chung

    Contributor Level 4


    Lawyers agree

    Answered . See a tax attorney or a tax CPA before doing this. He or she may help you find out what the IRS knows about your income for the past years.

    As for estimating expenses, you are allowed to do it so long as you have a reasonable basis for making the estimates. However, expect the IRS to challenge your estimates if they audit you. Again, see a tax professional to better understand how to do this.

    Best of luck.

  2. Phillip Monroe Smith

    Contributor Level 18


    Lawyers agree

    Answered . You are required to file by law, so file your best estimates. There can be significant civil tax liabilities assessed against, but probably not criminal charges unless you are concealing significant income. The IRS will prepare it own return (SFR = substitute for return), as will the State of California.

    Good luck!
    Phillip M. Smith Jr.
    Los Angeles Tax & Business Attorney
    Licensed in the United States Tax Court
    Main: 323-292-4116 ❘ Cell: 562-505-1004

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can... more
  3. Robert Jan Suhajda

    Contributor Level 17


    Lawyers agree

    Answered . I agree with Attorneys Chung and Smith. If you were not at fault then you should be better off than if you were just negligence. It sort of depends also on how big the numbers are. If you are at fault then keep on searching for the best evidence.

    Disclaimer of California Attorney. Laws differ from state to state. Although the above response is believed to be... more

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