Ihave recently closed my retail business. While operating I only expensed my items purchased for resale when they were sold. So my inventory is personally owned. What do I declare as ex-tax inventory now that my business is closed... $0?
When closing your retail business, you will need to determine the value of your remaining inventory for tax purposes. Since you mentioned that your inventory was personally owned and not expensed until sold, there are a few options to consider when declaring the inventory value.
1. Cost Basis: One approach is to value your inventory at its cost basis. This means you would calculate the original purchase cost of each item in your inventory. You can refer to your purchase records, invoices, and receipts to determine these costs. Once you have the total cost, report this amount as the value of your inventory.
2. Fair Market Value: Another option is to determine the fair market value (FMV) of your inventory. FMV is the price at which a willing buyer and seller would agree on the sale of the inventory. It represents the value of the items in their current condition and current market demand. To get the FMV, you may need to research similar products and their prices in the current market. Keep in mind that FMV may be higher or lower than the cost basis.
3. $0 Value: In some cases, if the fair market value of the inventory is very low or if the items are no longer sellable, you may choose to declare your inventory with a value of $0. However, this is only applicable if you genuinely believe that the value of the inventory is negligible or if it has become obsolete.
When it comes to declaring your inventory value for tax purposes, it is always recommended to seek professional advice from an accountant or tax specialist. They can help you determine the best approach based on your specific circumstances and local tax regulations.