Question on closing LuLaRoe business

[Wingsnaprayer]

Inventory was purchased in 2017 and there have been no sales since 2018.  There is $17,000 worth of inventory I would like to claim as a business expense in 2022 or donate to charity in 2023.

What is the best and correct way to handle this?

Thank you!

[AliciaP1]

You need to file a final Schedule C for the business in 2022 (as long as that is how you were reporting the business when it was operating).  You will list the $17,000 as beginning inventory and $0 as ending inventory.  This will expense out the inventory and as long as you have other earned income to offset the loss, it will reduce your tax liability for 2022.  You can then do what you want with the inventory items, but you cannot sell them again without reporting the income, nor can you donate them and take a Charitable Contribution deduction for them.  You can still donate them, but no deduction on your 2023 returns for the items.

To report a "final" Schedule C in TurboTax Online you can follow these steps:

1. Within your tax return use the magnifying glass icon to search for Schedule C
2. Click the Jump to link
3. If your Schedule C has rolled over from 2021 you should click Edit for the business you need to end
   • Scroll down and under the Business Summary section click Edit for Your XXX info
   • Click Edit for Stopped work in 2022 and click I stopped XXX in 2022
4. If you need to create a new Schedule C to report the loss and mark the business ended, answer Yes on the Did you have any self-employment income or expenses? Screen and explain your type of work
   • On the Tell us about how long...screen, mark XXX stopped XXX in 2022
5. You will need to find the Inventory category under the assets to enter your beginning and ending inventory as described above