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J
jkmmgc
February 4, 2025
Question

Cancelled contract material expense.

  • February 4, 2025
  • 1 reply
  • 0 views

I purchased material for a contract that was subsequently cancelled.  The material was specially made for the specific part and can't be used for anything else.   How do I write off the material that will be scrapped?

1 reply

D
DianeW777
February 4, 2025

It depends. If this was a cost of doing business for your self employment activity it will be deductible. This will be an expense on your Schedule C as part of your 'Materials' or 'Supplies' cost.  You had the expense even though you received no additional income for your business.

If you are not carrying on a trade or business there would be no deduction.

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