MommaD wrote:

- quote -

Did you take a tax deduction when you paid for the
inventory? If so, the amount refunded is taxable income and
you have no additional deduction.

Regards,
Bill

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You evidently didn't account for the inventory or expenses
last year on a Schedule C or you would know what to do now.
IF that's the case, just write off on a schedule C all your
expenses including 10% for the inventory return, against
whatever income you had and take the resulting loss on line
12 of form 1040.

The 90% is not income or expense, it is a capital item of
inventory. The 10% is a penallty, or you could have put the
inventory at 100% last year and show it "sold" at the 90%
figure this year, creating a 10% loss.

How a CPA would do this properly, and how you can fudge it
this year are 2 dirfferent things, but why increase your
loss with professional fees?

ed

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MommaD wrote:

- quote -

First, look at your schedule c last year to determine that
any inventory was indeed so reported on page 2. Then call
the preparer who did your return and ask how these purchases
were accounted for. Were they reflected as inventory on
page 2?
Or were they written off as "supplies' on page 1?
Or were they written off already ?
If so, then yes, you will have income on the 90% with no loss.

If properly accounted for as inventory, your income/loss
will be the difference between what you get and what you
ended up with upon ceasing business.

ChEAr$,
Harlan Lunsford, EA n LA

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I became a Mary Kay consultant last year. Unfortunately,
due to lack of guidance and mis-communication, I have
decided to end my Mary Kay career. I recently returned the
balance of my inventory to Mary Kay and received my 90%
refund. How will I have to show this on my taxes next
year? Will the 90% be considered "income" and the 10% be a
"loss"?

Thanks,
MommaD

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