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Inventory When Closing Business

Business Law discussions

Inventory When Closing Business

Postby Glew » Tue Jun 28, 2016 1:02 am

s About Taxes)/Inventory when Closing Business Advertisement Expert: Randall Klein, MBA, EA - 4/14/2011 I am closing out a small skin care business. I donated 1/2 of my inventory at year end to a local charity and kept the other half for personal use. Where and how do I report this? I can't find anywhere to indicate that I donated the inventory.
Glew
 
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Inventory When Closing Business

Postby Yoshi » Sun Jul 03, 2016 1:14 am

s About Taxes)/Inventory when Closing Business Advertisement Expert: Randall Klein, MBA, EA - 4/14/2011 I am closing out a small skin care business. I donated 1/2 of my inventory at year end to a local charity and kept the other half for personal use. Where and how do I report this? I can't find anywhere to indicate that I donated the inventory.
Yoshi
 
Posts: 58
Joined: Mon Feb 10, 2014 12:46 pm

Inventory When Closing Business

Postby Jethro » Mon Jul 04, 2016 1:35 pm

Your inventory will be zeroed out.

You will have a charity deduction at COST for the inventory given away. The rest is just *gone* and doesn't appear on the return.

Imagine you have $20 worth of inventory left.

You had $50 in sales(at 100% markup). You had $45 in inventory at the start of the year.

At the end of the year, you gave $10 worth for charity.

There is now $35 of inventory used for sales or *gone*. You took $10 of inventory for yourself(a distribution), so it reduces inventory, but not COGS.

The last $25 is COGS.  
Jethro
 
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Joined: Fri Jan 03, 2014 1:47 pm


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