flooding

[Unregistered]

Taxpayer's business was ideal in 2005 (no income). Some of the inventory was destoyed because of flooding in the basement. Can I stiil claim a loss from the inventory even though taxpayer's business had no income

[Safire]

Negative COGS

I won't say no, but that would create a loss through negative cost of goods sold, and that is a definite red flag.