I had some products go bad close to a grand of it... i understand that from my books point of view, that's simply a debit or increase in my cost of goods sold and a credit or decrease to my inventory. But how do I enter that into Turbo Tax? the calculation is beginning inventory plus purchases minus ending inventory is cost of goods sold. isn't there a way to further explain the rise in cost of goods sold?
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Tax reporting of inventory shrinkage is exactly the same as book. You will merely report your ending inventory without the $1,000 worth of expired products and let the cost of goods sold increase to cover the "loss".
If your products expired during the year 2022, their total affects your ending inventory number. So, enter your beginning inventory number as you would normally into TurboTax. The remaining TurboTax questions should mirror the IRS Schedule C Part III lines 36-41. Line 36 asks for any purchases less personal item costs. Line 37 asks for cost of labor, not including your own. Line 38 asks for Materials and Supplies. I would subtract the value of expired products from this number. Line 39 asks for any other costs. If you had expenses associated with removing expired products, list those expenses here. Line 40 is the total of lines 35 (Beginning Inventory) through line 39. Line 41 asks for your Ending Inventory number.
Good answer but, is it the Turbo Tax answer? The thing is, we want to avoid an audit by doing everything as proper as possible. Is this actually where this goes? Or should it go elsewhere with an explanation? Again, i should be able to get an official answer from turbotax but here i am in the public forum!
Tax reporting of inventory shrinkage is exactly the same as book. You will merely report your ending inventory without the $1,000 worth of expired products and let the cost of goods sold increase to cover the "loss".
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