I sold the retail business which consisted of inventory (which was sold to the buyers).
The ending inventory for the tax year would be zero. How does the sold inventory (to new buyers) get recorded on Schedule C? Does it get added to revenue amount for the business? Or does it go on other income for line 6 of Schedule C?
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If you sold your entire business, then you (and the buyer) will each most likely need to prepare Form 8594.
See https://www.irs.gov/instructions/i8594
In that event, you should seek guidance from a local tax professional.
If you sold your entire business, then you (and the buyer) will each most likely need to prepare Form 8594.
See https://www.irs.gov/instructions/i8594
In that event, you should seek guidance from a local tax professional.
First seek local professional guidance ... but to answer your questions...
How does the sold inventory (to new buyers) get recorded on Schedule C? It is just ordinary income and the EOY inventory amount will be zero on the Sch C.
Does it get added to revenue amount for the business? Yep ... include it with all your other income.
I am advised to leave out the sale of inventory from CoGS and make gross profit negative. He is putting it in line 6 as other income to the sale of inventory. My TurboTax software is showing me this is a red flag since I am showing over $60k of loss this year compared to $30k of profits in prior years for the business.
Find a different CPA.
Skip the CPA ... instead use an Enrolled Agent who does nothing but income tax returns.
@Critter-3 wrote:
Skip the CPA ... instead use an Enrolled Agent who does nothing but income tax returns.
Excellent idea.
https://taxexperts.naea.org/listing/service/business-tax-preparation
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