How do I document retail losses on a 1120S form for a prior tax year?
I am completing prior year taxes for a small business that went out of business in 2009.
I incorporated in 2005, opening my doors in November 2005.
I was an S-Corporation, so am using form 1120S.
My company was a retail boutique selling men's and women's clothing. For the year 2008, I had inventory that I couldn't sell, so put about $49,000 (retail) of it into consignment shops to dispose of it. In 2008 I received $1100 for some of the sales of these consignments, had to pick some of it up when that shop closed and some of it ended up being liquidated all together when I closed, along with remaining inventory.
I have been using a cash-based method to report my taxes, and am not sure where on this form to report these losses.
I don't think I can use the LIFO and am not sure if I can somehow claim these losses through Schedule A.
I want to get it right. My business stuck in the $125,000 income level--that may have been the highest I earned.
I would very much appreciate any help you can give me. The IRS isn't answering phones today anywhere due to budget cuts. I am on a deadline.
Thank you for your help.
I really hate telling you this, but I am not a CPA and am not a tax expert. I do bookkeeping.
That said, do you show an inventory amount at all on your Balance Sheet?
If you do, make an adjusting entry to decrease inventory to zero and post that amount to your purchases account, which will increase your Cost of Goods Sold. Which effectively decreases your profit.
However, I AM NOT a tax expert. Just trying to help. If you can afford it, talk to a CPA or someone who operates a Tax Business.
I don't know if that helps you, but I have to be honest with you.
I wish you the best