topic Inventory disposal in Business & farm

Inventory disposal

Thebesr525 — Wed, 23 Sep 2020 14:19:16 GMT

How and where is inventory disposals booked on schedule C

if included in beginning balance is the write down allowed as a deduction with proof of disposal

Re: Inventory disposal

Rick19744 — Wed, 23 Sep 2020 16:59:22 GMT

When maintaining inventory you will have beginning of the year (except in the initial year) and you will have end of the year inventory. If you have disposed of inventory, this will get adjusted with your end of year inventory valuation. As a result, your cost of goods sold will now be adjusted accordingly.

Re: Inventory disposal

Carl — Wed, 23 Sep 2020 19:28:39 GMT

If this is because you closed your SCH C business in 2019, your EOY Inventory Balance *has* to be zero. So if you have any remaining unsold inventory, the simplest thing to do so you can make the EOY Balance zero, is to just show that remaining inventory as "removed for personal use". That will make your EOY Inventory Balance equal to ZERO.

If this is *NOT* a SCH C business, then different things have to be done. Just let us know.

Re: Inventory disposal

Anonymous_ — Wed, 23 Sep 2020 20:05:42 GMT

@Carl wrote:

...if you have any remaining unsold inventory, the simplest thing to do so you can make the EOY Balance zero, is to just show that remaining inventory as "removed for personal use".

There is no "removed for personal use" on Schedule C. Line 36 on Schedule C is for Purchases less cost of items withdrawn for personal use.

@Rick19744's answer is correct since maintaining an inventory involves taking a physical inventory as of the end of the year and adjusting the valuation. The result will simply be the regular formula for cost of goods sold (Beginning Inventory less Ending Inventory equals cost of goods sold (assuming no purchases)).

It also makes no difference whether or not this is a "SCH C business"; the CGS formula is the same.