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mikhei1974-
New Member

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

 
6 Replies
Carl
Level 15

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

You'll deal with inventory in the "Inventory/Cost of Goods Sold" section.

Beginning of Year (BOY) Inventory - What *you* paid for the inventory in your physical possession on Jan 1 of the tax year.
 End of Year (EOY) Inventory - What *you* paid for the inventory in you physical possession on Dec 31 of the tax year.
Cost of Goods Sold (COGS) - What *you* paid for the inventory you actually sold in the tax year. It does not matter in what year you paid for that inventory.

Note that your BOY inventory *must* match the EOY inventory reported on your tax return of the previous year. If it does not, the IRS wants to know why.

Here's examples:

BOY - $0
EOY - $0
COGS - $5000

The above indicates you started the year with no inventory. THen you purchased $5K of inventory you sold in that same year, and ended the year with nothing in inventory.

BOY - $1000
EOY - $2000
COGS - $5000

The above indicates you started the year with $1K in inventory. Then you purchased an additional $6K of inventory. You sold $5K of inventory leaving you with an EOY inventory balance of $2K.

mikhei1974-
New Member

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

ok. So that's not the case. We purchased over $300K in parts and used them. So there is no inventory.  These are just people that owe us for their car repairs.  Can I deduct anywhere else on the Schedule C as accounts receivable?
Carl
Level 15

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

Your parts "are" inventory, any way you look at it. If you had no parts on hand at the beginning of the tax year, then your BOY inventory is zero. If you had no parts on hand at the end of the year, then your EOY inventory is zero. Since you purchased $300K of parts in 2016, "and" sold those same parts in 2016, your COGS is $300K. The first example applies if you just change the COGS in that example to $300K.
mikhei1974-
New Member

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

In years past - returns were not done properly and were cash method.  This year, return is being done properly and we do carry a small inventory and have these receivables, which have never been accounted for..
Carl
Level 15

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

If you're using the accrual counting method, please state so. Otherwise, if you're using the cash method in your business, you don't report, that which you have not been physically paid in the tax year. Does your business carry inventory maybe? Is that where the issue is that may or may not have you confused?

Carl
Level 15

How do I enter accounts receivable on my Schedule C? I have about $50,000 owed to me on the books and do not know how to enter?

Basically, if your 2015 return did not utilize COGS, or if that return shows an EOY balance of zero for Dec 31 2015, then regardless of what you had on hand on Jan 1, 2016, you need to make sure your 2016 BOY inventory shows zero, so that it matches your 2015 EOY inventory balance. (Which was zero if COGS was not used at all on your 2015 return).  Overall, it "will" work out in the wash, and avoid you raising flags with the IRS.

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