So my sole proprietorship business carries an inventory. This year I personally loaned the business money to buy inventory, as I have been faced with the problem of vendors needing to be paid up-front but with Covid issues having to wait months for my goods.
It is what it is- my problem is trying to figure out how that impacts my COGS for the year. My end of year inventory is going to be (as of this moment, could change) $100,000 higher than normal because of my situation. The business owes me $100,000 but the inventory valuation increase is going to translate to an extra $100,000 in earnings.
I don't want to have to pay taxes on $100,000 in phantom profits, so should I be deducting the balance of the inventory loans from my end of year inventory valuation?
This is from a guy who used to do corporate accounting...
Any help appreciated.
