Selling retail business inventory to new owner at a discount -

Forum|Forum|3 years ago
March 29, 2023
1 reply
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Selling well established small retail business and have agreed to discount the inventory to compensate for some older and shopworn merchandise. Set sale transaction date to January 2023 as opposed to December 2022 for tax purposes so starting inventory for 2023 will match ending for 2022. Sale amount of inventory will be less, so while ending inventory reported on 2023 taxes will be zero we will have lost about 20K on the sale. Confused about how we will report this on schedule C for 2023. Don't see anywhere between lines 34 and 42 to report this. Does it go on lines 1 and 2 with line 1 being the actual amount being received for the inventory, and then, an adjustment from that amount on line 2 reflecting the discount? Thanks!

RobertB4444

Sale of inventory is just what it sounds like. You will show your inventory as reduced to zero and then you will show your income as increased by the payment that you received. This will result in you showing as losing money but that is because you did. You had a bargain sale and lost money on the deal.

Put the total amount that you received in line one (along with any other income you have received in 2023) and then reduce your inventory to match.

@DFS1

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