How do I handle this?
Client has a lawnmower repair service. He purchased inventory several years ago from a repairman who was going out of business.
He had approx. $10,000 inventory in old used parts sitting in his garage. He of course used some every year for the past 5+ years and added to it with new parts.
He has an accurate $$ accounting of each and every part because that is way he purchased the other business so he knows each year exactly what he has in his cost basis inventory.
In 2008 he decided to clean out some old inventory and get rid of it as it was to old and he knew he would never need these parts to repair any mowers. He took $ 5652 cost basis of old lawnmower parts inventory and sold it to the scrap yard for $ 3100.
How do I handle this?
I say I show the 5600 as ( negative 5600) in the "other costs" to remove it from inventory and then do the sale as a sale of business property form 4797 showing his loss.
Do you agree?
I don't feel I can do it as COGS and the 3100 as sold when he is in the lawnmower repair business … not the junk/scrap dealer business.
I cannot believe my brain is gone before January is over !!!!!! *sigh* It's going to be a lonnnnggggggg season. LOL
Thanks in advance for your expert brain functions
Client has a lawnmower repair service. He purchased inventory several years ago from a repairman who was going out of business.
He had approx. $10,000 inventory in old used parts sitting in his garage. He of course used some every year for the past 5+ years and added to it with new parts.
He has an accurate $$ accounting of each and every part because that is way he purchased the other business so he knows each year exactly what he has in his cost basis inventory.
In 2008 he decided to clean out some old inventory and get rid of it as it was to old and he knew he would never need these parts to repair any mowers. He took $ 5652 cost basis of old lawnmower parts inventory and sold it to the scrap yard for $ 3100.
How do I handle this?
I say I show the 5600 as ( negative 5600) in the "other costs" to remove it from inventory and then do the sale as a sale of business property form 4797 showing his loss.
Do you agree?
I don't feel I can do it as COGS and the 3100 as sold when he is in the lawnmower repair business … not the junk/scrap dealer business.
I cannot believe my brain is gone before January is over !!!!!! *sigh* It's going to be a lonnnnggggggg season. LOL
Thanks in advance for your expert brain functions
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