I will be shutting down an online sales business after 20 years of operation. We have approx. $20,000 of inventory (based on cost) on hand that we cannot sell (shipping costs exceed what we can sell the items for). What is the best way to get rid of the inventory for tax purposes? Do we need to sell it all for some very low amount (whatever we can get for it, even if $100) or is there another way? My research leads me to believe that donating it to charity would not allow us to claim the cost as a business expenses, but please correct me if I am wrong.
There are special rules for donation of inventory to charity depending on the type of entity the business is.
other methods - sell what you can at a profit
1) throw the rest in the trash - i would take pictures just in case of an IRS inquiry
2) look up scavengers in your area. some might buy that inventory for pennies on the dollar but there are no shipping costs.
in other words, to take a write off you have to get rid of that inventory before the business is closed.