New Member

I closed an MLM business recently. I sent back all of the inventory I had on hand & got reimbursed for it. Will I get taxed on the reimbursement?

Level 15

After you file

Simple answer: No. But, It depends.

If you previously deducted the cost of the inventory when you bought it, then the reimbursement is income when you receive it.

But deducting inventory, when purchased, is not the proper way to do it (but some people do it anyway). If you did it properly and "carried" an inventory, you will report the reimbursement as income but deduct the inventory reduction as "cost of goods sold", showing no taxable income.