I am an independent contractor who subs for utility companies and other contractors who perform work for them. These companies provide consumable supplies necessary to complete the work, at no cost to me. As I understand it, they are not capital assets.
At the end of the year I always end up with surplus supplies that I generally sell, to make a little extra money and to free up space in my garage. I sell most items still new in the package, at a deep discount to the price of comparable new items . Other items I sell for scrap at an even deeper discount.
My question is, how do I classify the income? In 2018 believe I entered it as a line item sale of a business asset with 100% profit (since it didn't cost me anything). I'm just not sure if that is right.
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It sounds like these sales are directly related to your business.
If so, you would report the income as part of your business gross receipts or other income related to the business.
As I understand it, you have these supplies that you could also use in your own operations as a contractor in the normal course of your business. As such, any income your make from selling the items would be part of your normal operations as it happens every year.
Please comment if the circumstances are otherwise.
It sounds like these sales are directly related to your business.
If so, you would report the income as part of your business gross receipts or other income related to the business.
As I understand it, you have these supplies that you could also use in your own operations as a contractor in the normal course of your business. As such, any income your make from selling the items would be part of your normal operations as it happens every year.
Please comment if the circumstances are otherwise.
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