Discussion:Remaining Inventory - Business Closed
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Discussion Forum Index --> Basic Tax Questions --> Remaining Inventory - Business Closed
Discussion Forum Index --> Tax Questions --> Remaining Inventory - Business Closed
Rgtaxservice (talk|edits) said: | 9 April 2009 |
| The threads I've read offer conflicting opinions as to whether or not any remaining inventory can be written off when the business ceases operations.
My client was into selling candles for a few years. She was always profitable with it and it wasn't hobby income. In Jan/Feb of 2008, she purchased about $700 worth of candles from her supplier with the intent of selling them. She ceased her business operation in late Feb. The candles, over a hundred of them, are collecting dust in her garage. These candles are destined for a landfill. She had no other expenses in '08. Some threads state that the inventory can be written off and others state otherwise. I'm of the thought that these items would become personal property and any disposition, other than sale, would not be deductible. Can anyone shed any light on this? | |
| 9 April 2009 | |
| "It is better to light one candle than to curse the darkness." | |
| 9 April 2009 | |
| that being said, the COGS formula needs to be understood correctly.
If she removes the ending inventory at cost for personal use - there is no inherent deduction, but she has basis = to the amount taken out of COGS If she scraps her inventory as worthless, then the amount is not taken out, but ending inventory is zero, thus it is deducted in COGS. | |
Rgtaxservice (talk|edits) said: | 9 April 2009 |
| Thank you Kevin. Hopefully this thrread will stand as a definitive answer for the rest of the related threads. | |
RoyDaleOne (talk|edits) said: | 9 April 2009 |
| Depending on the method of costing the inventory, when is the inventory reduced?
When the client no longer has title to the inventory, may be the correct time to reduce the inventory to zero, or a reduction to scrap value may be available. Was there not a discussion of these rules somewhere? | |
TheTinCook (talk|edits) said: | 9 April 2009 |
| Oh yeah, I remember talking about Thor Power Tool Company and LCM here the other month. | |
