Ending inventory for decedent

[BigO81]

My mother passed away in 2022.  She had filed Schedule C to report self employment income for many years prior to her death.  Upon her death, her remaining inventory automatically transferred to her estate, and the business was officially closed.  What ending inventory should be reported on her final Schedule C -- zero or the value of inventory on her date of death?  If zero, then would the value of inventory transferred to her estate be reported as items withdrawn for personal use?  If the ending inventory should be reported as the value on her date of death, and she hadn't recorded that value, should I estimate the closing inventory based on profit she made in previous years?  Or should I not even file a Schedule C if I don't have an accurate ending inventory?  In other words, is it better to estimate business income or not report any income at all if I don't have accurate numbers?  Her gross sales for 2022 were approximately $3,200.  So it's a fairly small business.

[tagteam · Accepted solution]

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@BigO81 wrote:

If zero, then would the value of inventory transferred to her estate be reported as items withdrawn for personal use? 

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I am sorry for your loss.

It appears as if you simply need to move the inventory (at whatever valuation) to the estate (i.e., it is an estate asset) which, in turn, would take the inventory at its fair market value on the date of death as having been acquired from a decedent (per Section 1014).

In this event, the inventory would be zero'd out on her final 1040 and, in order to do that in TurboTax, it would be withdrawn for personal use.