I need to know how to handle inventory after closing my business.

Forum|Forum|7 years ago
June 1, 2019
1 reply
18 views

I closed my business in December of 2015. In the end, I have about 12,500 dollars in inventory that I want to keep for personal use. Do I claim that my inventory is 0, then claim 12, 500 for purchases withdrawn for personal use? Or do I claim 12, 500 in inventory, then zero it out by claiming 12,500 for purchases withdrawn for personal use? I am a sole proprietor. I do not want to donate or destroy my inventory. I am reading a lot of conflicting information.

TurboTax Self Employed Online

Best answer by

You will say that ending inventory is zero and also enter Purchases Withdrawn for Personal Use.

The most basic formula for account for inventory is:

Beginning Inventory (this should be the same as your ending inventory for 2014)
Plus Cost of Purchases
Minus Cost of Goods Sold
Equals Ending Inventory (since you’re closing your business, this is zero at the end of 2015)

There are other numbers in the middle one of which is Purchases Withdrawn for Personal Use. You enter the amount of inventory withdrawn for personal use so that the amount you kept for personal use isn’t included in your Cost of Goods Sold.

This is how you will enter the information for the inventory section:.

After going through the preliminary screens for inventory, you reach “Report the Value of Your Inventory”
Beginning of 2015 – the same amount of your ending inventory for 2014
End of 2015 – Zero
On the following screen, “Tell Us the Cost of Your Goods”
You will enter $12,500 at the Purchases Withdrawn for Personal Use

Make sure you also enter any other data you have for this screen such as Cost of Purchases.

Anonymous

Answer

You will say that ending inventory is zero and also enter Purchases Withdrawn for Personal Use.

The most basic formula for account for inventory is:

Beginning Inventory (this should be the same as your ending inventory for 2014)
Plus Cost of Purchases
Minus Cost of Goods Sold
Equals Ending Inventory (since you’re closing your business, this is zero at the end of 2015)

This is how you will enter the information for the inventory section:.

After going through the preliminary screens for inventory, you reach “Report the Value of Your Inventory”
Beginning of 2015 – the same amount of your ending inventory for 2014
End of 2015 – Zero
On the following screen, “Tell Us the Cost of Your Goods”
You will enter $12,500 at the Purchases Withdrawn for Personal Use

Make sure you also enter any other data you have for this screen such as Cost of Purchases.

cerickson

Level 2

What if I give away most of the inventory instead of keeping it for myself.

I'll have zero sales and zero inventory at year end. I actually did not even continue the business after the first day of 2020.

ThomasM125

Level 15

It doesn't matter if you give it away versus keep it. You don't get a deduction because you give things away.

The issue here is what the value of the items are. If they decreased in value so that on the last day of the business they were worth less than what you paid for them, you could reduce the cost of items withdrawn for personal use to reflect the deceased value and you would get a business deduction for that. But once they are out of the business, you can't take a deduction on the items as they become personal assets, the loss on which is not deductible.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"