Another, and hopefully final tax question related to the sale of our small retail store:
When we sold the store at the beginning of 2023 there were approximately $3000 in gift certificates which we has sold to customers that had not been redeemed.
In the buy/sell agreement we committed to reimburse the buyer of our store as the certificates were redeemed. This has worked well, and virtually all of the certificates had been redeemed by the end of 2024.
The (simple?) question that I’m having trouble wrapping my old retired brain around is what, if any, tax deduction we might be allowed on a schedule C for our payments to the new owner of the store?
We took a payment from the customer, gave them a document of equal value and reported it as income in the year the certificate was sold. By repaying the new owner for the certificates are we simply “refunding” the amount we were originally paid by customers?
I’m filing a Schedule C for 2024 to expense some accounting work that was incurred in 2024 and one side of my brain is telling me that I should show the redemption of the gift certificates as a return on line 2. The other side of my brain is simply confused.
Thanks a million - or at least $3000
