We didn't keep track of how many cars we sold and its cost.
I have totals from bank account as Deposits, Payments and Checks paid. Deposits is money from selling cars, Payments and Checks Paid are for buying cars.
Deposit: $600K
Payments: ($400K)
Checks paid: ($100K)
Does this mean, I have gross profit of $100K or loss of $166K (see below)
We also received 1099-K from credit card company for $75K. (we do have cash sales too)
Can I assume this is for Part 3 on Sch C
Beginning Inventory: $36K (from last year Line 41 part 3 Sch C)
Purchases: $500K
Cost of good sold: -$241K
Ending Inventory: $195K (this is guess value)
So, $75K from 1099-K minus -$241K COGS is -$166K? is this correct?
I thought gross profit is sales minus cost. but here it seem it depends on my ending inventory? remember I haven't posted my expenses to run the business like rent, taxes etc
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@stech wrote:So, $75K from 1099-K minus -$241K COGS is -$166K? is this correct?
No, not correct.
Beginning inventory ($36,000) PLUS Purchases ($500,000) LESS Ending Inventory ($195,000) = Cost of Goods Sold (COGS), which would be $341,000. So, $341,000 is your COGS.
Gross profit would be your Gross Receipts LESS Returns LESS Cost of Goods Sold
So COGS is automactially calc in Part 3?
@stech wrote:
So COGS is automactially calc in Part 3?
Do you mean in the program?
If so, then, yes, the program does the calculation after input.
@stech there should be no reason to guess at the value of ending inventory. you should have paperwork for the purchases and paperwork for the vehicle sales. if you are ever audited by the IRS this is what they'll ask for and if you don't have this paperwork they can certainly tax the revenue but disallow the cost. what do you indicate on the tax return as the method for valuing closing inventories? you are signing the return under penalties of perjury. most likely you would never be charged for this but the disallowance of costs you can't prove can result in a substantial increase in your tax bill along with the associated penalties and interest.
It appears you have all the information, it's just that you don't understand how to interpret it.
If you are maintaining a checkbook, which it appears you are, and as you should, then each check entry should have a description; car purchase, car sale, expense, etc.
Based on the limited information, you appear to be able to determine sales, purchases, etc.
You would certainly benefit from meeting with a tax professional, or at a minimum, a bookkeeper who can pull together the information in your checkbook.
As noted by @Mike9241 , if you can't figure out what is in the checkbook, then you certainly aren't going to be able to challenge any potential IRS audit. That is not a good end result.
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