If I can't produce my records in an IRS exam, can they really disallow my deductions and cost of goods sold?
I've always thought the worst case for a missing Form 5472 or bad records was the $25,000 penalty. But a friend said the IRS can actually throw out my deductions and even my cost of goods sold if I can't produce records. Is that real, or is it just scare talk? My LLC imports inventory from my own foreign company, so COGS is most of my expenses.
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