Discussion:End of year inventory deduction
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Discussion Forum Index --> Accounting Questions --> End of year inventory deduction
| 12 July 2008 | |
| I know this has been debated before but here is my problem.
In my business I have to stock pile inventory by the end of December because we dont get new Inventory until the following April. We are a S corp on a cash basis with sales under a million dollars. We track our inventory and I have been over this a hundred times with my CPA. I dont deduct my inventory I have to stock pile on until the year that I sell it. This is killing me tax wise. Since I get to pay taxes on that inventory like it was income (even though its a business expense and that is not income I took home) it has put me in the highest tax brackets. It killed me this year. It wiped out most of my credits (like all my child tax credits), The Stimulus package, and most of my deductions. So I have to pay income on income I did not make. My wife is fuming mad at me and is sick of paying taxes on 2 dollars and only getting one dollar taken home. Say I take home 50K because of the end of year inventory thing I have to pay taxes on 100K So any ideas? Is there any loop hole or anything I can do with this. It is a serious disincentive for me to grow my business. I want to sell more products and add more lines but my personal taxes are only going to get worse and worse and I dont want to expand my business and invest in capitol and more employees because I am going to get murdered on taxes. Any ideas? Thanks Dustin | |
| 12 July 2008 | |
| From what you've described your accountant is right - and you are dead wrong.
You cannot take a business deduction for merchandise that has not been sold. This inventory is considered an asset of the business until it is actually sold. The reason for this is to follow the accounting concept of matching revenues with their related costs. That is why your accountant should be asking you at year end "How much inventory do you have". And you are not paying taxes twice on the same income. I strongly suggest you have your accountant explain it to you. If he/she is not willing to do so - I suggest you seek another accountant. It is quite obvious that you don't understand the business concept of accounting. | |
| 12 July 2008 | |
| Actually its pretty evident you did not read my post "and you are dead wrong" how am I wrong? I know tax law better than most CPA's. I took all the accounting classes in college. Of course my CPA is right, if he was not I would fire him. Just because I disagree with tax law that makes we wrong and stupid? I have always done it by the book, I have always never deducted inventory I had at the end of the year. I was not asking for your opinion I was wondering if anyone has any advanced ideas on how I could fix this problem. If you dont have any idea beyond your little box then dont respond.
For someone who is business minded and thinks outside the box for a legal way to help me with this problem I would love to hear it. | |
| 12 July 2008 | |
| Look - Mr. Know It All - this is a board for PRACTITIONERS to exchange information with each other. We're not here to blindly give advice to people who aren't our clients. And for stubborn people like you most practitioners on this board don't take kindly to answering questions with your attitude. | |
RoyDaleOne (talk|edits) said: | 13 July 2008 |
| The problem is easy to solve.
Actually, I have seen this problem before with fishing lures. | |
| 15 July 2008 | |
| I hope your CPA (that poor devil) charges you Triple for having to put up with your surly and ignorant attitude. | |
