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Inventory disposal

Forum|Forum|5 years ago
September 23, 2020
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How and where is inventory disposals booked on schedule C

if included in beginning balance is the write down allowed as a deduction with proof of disposal

TurboTax Business Windows

Best answer by Rick19744

When maintaining inventory you will have beginning of the year (except in the initial year) and you will have end of the year inventory. If you have disposed of inventory, this will get adjusted with your end of year inventory valuation. As a result, your cost of goods sold will now be adjusted accordingly.

Rick19744Answer

Employee

When maintaining inventory you will have beginning of the year (except in the initial year) and you will have end of the year inventory. If you have disposed of inventory, this will get adjusted with your end of year inventory valuation. As a result, your cost of goods sold will now be adjusted accordingly.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

Carl11_2

Employee

If this is because you closed your SCH C business in 2019, your EOY Inventory Balance *has* to be zero. So if you have any remaining unsold inventory, the simplest thing to do so you can make the EOY Balance zero, is to just show that remaining inventory as "removed for personal use". That will make your EOY Inventory Balance equal to ZERO.

If this is *NOT* a SCH C business, then different things have to be done. Just let us know.

A

Anonymous_

Employee

@Carl11_2 wrote:

...if you have any remaining unsold inventory, the simplest thing to do so you can make the EOY Balance zero, is to just show that remaining inventory as "removed for personal use".

There is no "removed for personal use" on Schedule C. Line 36 on Schedule C is for Purchases less cost of items withdrawn for personal use.

@Rick19744's answer is correct since maintaining an inventory involves taking a physical inventory as of the end of the year and adjusting the valuation. The result will simply be the regular formula for cost of goods sold (Beginning Inventory less Ending Inventory equals cost of goods sold (assuming no purchases)).

It also makes no difference whether or not this is a "SCH C business"; the CGS formula is the same.