Business Merchandise Purchases

[kpoppa70]

My wife and I both used our personal funds to buy merchandise that we sell in our store during 2021.  Will we be able to deduct this from our K-1?  If so, where do we add this deduction?  Would it be under All Other Deductions or would we fill out a 199A form?  We have already filed our taxes for this year, but are looking at amending our K-1's for these items (thought we could catch it in our personal taxes but was told by a tax professional that we need to amend our K-1's and then amend our personal taxes).  Appreciate any help you can provide!

[rjs · Accepted solution]

Let the tax professional straighten this out for you. Don't try to do it yourself. You cannot just amend the Schedule K-1s. You have to amend the Form 1065 or Form 1120-S tax return that the K-1s came from.

And STOP - RIGHT NOW - mixing personal and business funds. Open a separate bank account for the business, if you don't already have one, and only use business funds to buy merchandise for the business. If you need to put more of your own money into the business, ask the tax professional how to do that. Even though you own the business, it is a separate legal entity.

If your tax professional is not an accountant, you might need an accountant to show you how to set up proper bookkeeping for the business.

[kpoppa70]

Thanks for the advice!

We do have business accounts set up and proper accounting software (accountant) etc.

There are times when we make a purchase that we don't have the business card or account numbers at hand.

[Critter-3]

Always use the business card/account  for business expenses ... if you co mingle personal & business the auditor will eat you up at an audit  because they will not only audit the business accounts  but your personal accounts as well.