How best to report "Merchandise Sales" for an S Corp. that were reported on a 1099-B

[Noyo99]

I have a decent tax background and am helping a friend prepare their Federal and State tax returns for an S Corporation using TurboTax.  He is in the business of selling gold and silver bullion as well as collectible coins and stamps to the public and I am reporting all of his sales as "Merchandise Sales."  Three different times during 2021, he sold some bulk silver to another seller of gold and silver bullion, who issued 1099-B's for each of these transactions.  I'd like to just include these sales transactions in the "Merchandise Sales" line, but am concerned that the IRS will flag this return if they can't tie to the total "Proceeds" numbers included in these 1099-B's.  Any advice on a best way to approach reporting these 1099-B sales is appreciated.

[tagteam]

Most states have bulk sales acts where a sale of all, or nearly all, of the inventory (of a business) not in the ordinary course of business must be reported. 

Thus, the scenario involves an issue beyond federal income tax implications, the latter of which should actually not raise a significant issue (unless the sale is considered to be a sale of the business).

[ThomasM125 · Accepted solution]

Since he is a dealer the sales should be reported as you suggest as merchandise sales. You should also report the investment sales so that the IRS can tie the return to their records. To do this, just assign a cost basis equal to the sale proceeds so they will indicate $0 capital gain.