Inventory Transfer Question - Schedule C

[jswalom]

I changed my business structure from a Sole Proprietor to a single owner LLC. How do I show I had no inventory for 2021 on the sole proprietorship because it was all moved to the LLC starting in 2021?

[DavidD66]

From a tax perspective, there is no difference in being a Sole Proprietor and having a Single Member LLC - unless you elect S-Corp status for the LLC.  If you did not elect S-Corp status, the IRS considers your LLC a "disregarded entity" for tax purposes, and you will still file on Schedule C as a part of your Personal return.  The only real change would be to add your tax ID #, if you obtained one, and to add the name of your LLC to your Schedule C.

[jswalom]

Yes, I have done all of that. But my question is do I just put $0 inventory on my sole proprietorship and then take all of that inventory and put it on the LLC for the beginning of year inventory? 

The sole proprietorship still had income from non-physical inventory from 2021. 

[LudwigVan_fan]

Don't quite get your question.  The LLC, unless elected otherwise, as a 1 member, is a disregarded entity for tax purposes.  Thus, just keep the same Sch C, with name change and ID number included.

The numbers from 2020 into 2021 will be the same for inventory, etc.  Thus, whatever 12/31 inventory you had before LLC will become 1/1 inventory of same Sch C as LLC

[jswalom]

So even though income was received in 2021 for the sole proprietorship I don't need to fill out a schedule C for it? I just put everything on the Schedule C with the new LLC name and TIN?

[ZoltanB45]

Since it is the same industry, you can just combine the activity in the one schedule c. The one potential issue is if you received a 1099 to your social security number, the IRS might ask about that income. Even then, it can be easily explained and there wouldn't be any penalty.