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What do we do if we have inventory leftover from a home based business and are no longer selling the product? I had a health issue and had to stop using the product.

I was able to sell some product back to the company, but still have some inventory and was unable to sell it...
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Carl
Level 15

What do we do if we have inventory leftover from a home based business and are no longer selling the product? I had a health issue and had to stop using the product.

To completely report your business as being no longer, you must do all of the following:

At the beginning of the business section one of the screens has a selection on it for "I sold or otherwise disposed of this business in [tax year]. You must select that option and press on "as if" you still own the business.

WHen you get to the business summary screen, you have to work through income and expenses, even if those amounts are all zeros.

Next, you must work through the Business Assets section, and if any assets are listed there you must show your disposition of each and every asset one at a time. Start working through the first asset and on the screen that ask, indicate that YES you DID STOP USING this asset in [tax year]. Then continue working the asset through to report it's disposition - be it sold, removed for personal use, given away, stolen, destroyed, whatever.

Note that you must show your disposition for each and every asset listed, individually.

Next, if you have any unsold inventory indicated by an End of Year (EOY) balance in the COGS section, you must get your EOY balance to zero. To do this, indicate that you removed all remaining inventory "for personal use". This gets your EOY inventory to zero.

After you're finished with all the assets, if your business claimed ANY vehicle use at ANY time you were in business, then you will need to work through the business vehicle section to show the disposition of the vehicle - even if that vehicle was a personal vehicle not used 100% for the business. Most likely, your disposition of the vehicle would be "removed for personal use", beucase while not unheard of, it's rare that the sale of a business reported on SCH C would include the vehicle in that sale too.

Once you've completed all the above, just work it through to the end, and this will be the last year you file a SCH C for this specific business that you no longer have.


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