I purchased event tickets to resell in 2016. Most sales were done in 2016, but some of the tickets did not sell until 2017. How should I report the sales/expenses?

[josephdibiaggio]

The tickets were bought in 2016, but they were not sold until 2017 which is when I was paid for the sale as well. How should the expense of the tickets be reported on my return? Should the tickets be inventory? I just want to make sure I account for the money I spent on the tickets as it adds up to almost $30,000. Any help is appreciated?

[MinhT · Accepted solution]

The value at cost price of unsold tickets at the end of 2016 must be reported as ending inventory, so that their cost is excluded from your Cost of goods sold (COGS).

[josephdibiaggio]

Thank you! So should the cost of the tickets be included in my COGS and then on my ending inventory? Also,should the sales of the tickets be included in accounts receivable/payable as money to collect?  Which is the same amount as my ending inventory since they all sold in 2017. I am just having difficulties balancing the balance sheet.

[MinhT]

If you are using the cash method, you do not report accounts receivable. The cost of the unsold tickets at the end of 2016 is reported as ending inventory and appears as an asset on the balance sheet.

[josephdibiaggio]

Ok thank you. So include them in the cost of goods sold as the expense, report as ending inventory, and include as an asset on balance sheet?

[MinhT]

The cost of the sold tickets are reported as cost of goods sold on Schedule C, not on the balance sheet.

[josephdibiaggio]

I have a partner so we are filing a 1065 partner return with schedule Ks so we are getting confused of how it should all be reported and still balance out

[MinhT]

Without all the details, I cannot advise you further.

[josephdibiaggio]

We are filing as a partnership, so we just need to know where to report the purchased tickets..will they be included in COGS, ending inventory, and as assets? Sorry for all the questions just trying to report them correct

[MinhT]

The cost of the sold tickets is reported as Cost of goods sold. The unsold tickets are in ending inventory which is an asset on the balance sheet.

[josephdibiaggio]

The tickets are all sold but they were sold in 2017 and bought in 2016, so that is what we were unsure of if we should put them as inventory and include The cost of them in COGS as well

[MinhT]

Think of it as two lots of tickets. The tickets sold are reported as Cost of Goods sold. Those unsold at the end of 2016 are in ending inventory.

[josephdibiaggio]

I'm sorry for keep bothering you on this and you are helping a lot but I just want to make it clear that there are no unsold tickets..all tickets sold and bought in 2016 I already know to include as cost of good sold and the payments received from my 1099..i am just confused on the tickets that were bought in 2016 but were not sold until 2017..they aren't technically unsold just sold in a different tax year

[MinhT]

For your tax return, you look at the situation as of December 31, 2016. They were unsold at that date.

[MinhT]

You may need the help of an accountant.