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    #16
    I think the cost of goods should be credited for the inventory sold. Then that amount would be the cost basis on for 4797 so there would be no effect to SE tax(or nearly). The sales price would be also shown on the 4797 this would create a zero gain or loss on the 4797. The SE tax could be increased or decreased if the inventory was not correctly recorded on the company's books.

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      #17
      Hooray for me, ST, Jimm, Veritas (I think), and

      Originally posted by Bees Knees

      ...have to re-think this...still not sure whether...sale of inventory in a complete disposition...subject to self employment...

      ...stock in trade...which would properly be includible in inventory if...on hand at the close of the year.

      That indicates to me that it is still treated as inventory, even after you go out of business, thus subject to self employment tax...
      the IRS. Bees has just proved we're not uninformed ignoramuses after all (at least until Jack shows up to throw a fit or perform an excorcism for heresy).
      Last edited by Black Bart; 11-11-2006, 06:55 PM.

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        #18
        I'm positive now. Read the instructions for the 4797 for types of assets that are to be reported on it. Depreciable property and real estate, along with a bunch of farm animals. Inventory doesn't fall into any of the categories mentioned on the 4797.

        You would have to argue that the inventory was converted into a capital asset before you could report the sale on the 4797.

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