A small consulting firm on the 93rd floor lost equipment and documents in the Sept.11 collapse of the World Trade Center's south tower. Fortunately, all five employees survived.

Now business owner Patrick Duroseau is putting his business back together. One problem he will face is estimating his company's taxable income - he lost all his records in the attack.

Duroseau and other taxpayers have little to guide them in how to reconstruct records. One recent court decision illustrates the problem, but gives no solution: the case of Wayne and Terri Harlan of Tucson, Ariz. A storm had destroyed the storage shed where they kept business records. The judge was satisfied the loss was beyond their control. But still he ruled for the Internal Revenue Service. He said the only information he had about the income and deductions came from the Harlans' self-serving testimony. And that's not enough. He refused to allow any deductions beyond what the IRS had approved.

Businesses that lost records Sep. 11 can't depend on the courts to estimate taxable income without the taxpayer furnishing some basis. But few if any court cases or IRS rulings explain what's required. Here are some guesses:

• Use available records from previous years and adjust the figures for reasonable changes in the business and the economy.
  
• Create new records from data and information obtained from banks, suppliers and customers.
  
• Have their accountant reconstruct the records.
  

If none of these methods is sufficient, a judge might accept their testimony with reasoned estimates. One taxpayer, Carroll R. Furnish, a roofing contractor from West Palm Beach, Fla., got lucky. He convinced a judge to allow most of his expenses. Furnish's accountant, Richard Buckner, had died. After his death his widow, without Furnish's knowledge or consent, threw out all of Buckner's client records. Furnish unsuccessfully attempted to get records from suppliers. The court considered his cost computations reasonable and supportive of most of his deductions. It was helpful that the court considered Furnish "honest, forthright and credible."(more at Substantiation)