I closed out a wholesale distribution business in mid 2017. I filed 2017 Tax Return last year and didn't know if there was a form to inform that I have closed my business.
How do deduct my inventory losses in 2018 Tax Return?
Any tips or help is highly appreciated.
What happened to the inventory?
On the 2017 tax return, did you report an amount of left over inventory?
You should have left the ending inventory off your income statement in 2017, and it would have shown as a deduction in that year. You can amend your return to accomplish that.
If you didn't know until 2018 that the inventory was worthless, you can complete a business schedule in TurboTax like you normally do, and just show the ending inventory as -0-, and that will result in the beginning inventory showing as purchases in the current year, thus resulting in a loss in 2018. However, that may attract attention from the IRS since you will have expenses without any revenue in the current year.
@ThomasM125 wrote:You should have left the ending inventory off your income statement in 2017, and it would have shown as a deduction in that year. You can amend your return to accomplish that.
If you didn't know until 2018 that the inventory was worthless, you can complete a business schedule in TurboTax like you normally do, and just show the ending inventory as -0-
That is only *IF* it actually is worthless and was discarded. If may have been converted to personal use or given away to friends (which is personal use) and therefore you would NOT get a deduction for it.
All left inventories were discarded in mid 2017 when I closed my store. If I understand you correctly, I could amend my 2018 Tax Return so I could carry over 2017 ending inventory to future years? Currently when I file my 2018 Tax Return, the ending inventory figure doesn't carry over.
If you reported zero inventory at the end of 2017, then it is already deducted and there is nothing you need to do in regards to the inventory.
As for reporting the end of the business, (1) is this a Sole Proprietorship (self employed)? Or is it a Corporation? (2) Were you depreciating any "assets"? If so, on your 2017 tax return, did you indicate that you sold those "assets"?