Though the IRS randomlyselects returns for audit review, it will tag certain returns because of“suspicious information” or deductions. To reduce your business’ risk of beingaudited, avoid these common IRS red flags:
• Incomplete or inaccurateincome reports
• Unusual or above-averagedeductions
• Business losses,especially tax losses.
If you decide to takelegitimate deductions for business losses, keep all supporting documentation.To be extra safe, attach copies of the documentation to your return.
– Source: Tire ReviewBusiness Toolbox