Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-21-2018, 04:28 PM
Junior Member
 
Join Date: Feb 2018
Posts: 2
How to account for leftover inventory converted to personal use for closed sole prop

I had an online business for 3 years. I got help for the first year with COGS and inventory and all that, but decided to close this year. I have a lot of leftover fabric that I will mostly use for personal projects, and stumped trying to figure out how to put it on my schedule C. I've read a lot of conflicting information, and want to be sure I do it right.

For now, I have my beginning inventory from last year's end on line 35 (about $1500). I have my purchases for this year calculated out, and put the total of all my leftover inventory as a negative number subtracted from the purchases ($110- $1200 total leftover inventory). So now, I have a negative number, then I add labor ($0), Materials ($70), other costs ($300) and add everything to get around $800 for COGS- using rough numbers for example.

Is that the right way to do it, or should I be taking that $1200 of leftover inventory and writing it off somewhere else? My husband says I should write it off as a loss to get a bigger tax break, but not sure that is the correct way to do it. Thanks for any help!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-22-2018, 01:20 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
I had an online business for 3 years. I got help for the first year with COGS and inventory and all that, but decided to close this year. I have a lot of leftover fabric that I will mostly use for personal projects, and stumped trying to figure out how to put it on my schedule C. I've read a lot of conflicting information, and want to be sure I do it right.========> There is no tax advantage to keeping an inventory that is necessary for the business purpose.leftover inventory items are not a tax deduction until the inventory items are sold, or deemed ?worthless? and removed from the inventory. You have to report it as "removed for personal use". Report all that is left so that your EOY inventory balance for 2018 is zero. If it's not zero, then as far as the IRS is concerned, you're not completely closed and they will be expecting a Sch C from you next year.

For now, I have my beginning inventory from last year's end on line 35 (about $1500). I have my purchases for this year calculated out, and put the total of all my leftover inventory as a negative number subtracted from the purchases ($110- $1200 total leftover inventory). So now, I have a negative number, then I add labor ($0), Materials ($70), other costs ($300) and add everything to get around $800 for COGS- using rough numbers for example.

Is that the right way to do it, or should I be taking that $1200 of leftover inventory and writing it off somewhere else? My husband says I should write it off as a loss to get a bigger tax break, but not sure that is the correct way to do it==>>As mentioned above.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 02-22-2018, 01:48 PM
Junior Member
 
Join Date: Feb 2018
Posts: 2
I have my EOY at 0, but wanted to be sure I was deducting the inventory correctly. I understand that if I don't have it at 0, then my business isn't "closed". I am just trying to figure out if I report my inventory as a negative number on the "removed for personal use" line, or as a positive number somewhere else. Thanks for the advice.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Sole Prop LLC's notacpa123 Limited Liability Company 1 01-07-2017 11:41 PM
C - Corporation Vs. Sole Prop Cmorse C-Corporation 1 05-31-2014 03:06 AM
Sole prop deductions Cmorse Sole-Proprietorship 1 05-15-2014 08:30 PM
Passive Income as a Sole Prop. lewgard Sole-Proprietorship 1 02-14-2012 11:39 PM
Sole Prop with no income, only expenses in 2010 mlblake77 Sole-Proprietorship 1 09-02-2011 03:53 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.