Inventory

[2011retiredworker]

I received a large amount of free printer ink that is expired. I want to add these to my inventory spreadsheet. To me, the value is zero. However, I do think I need to be able to give each one a value. 

Also, I have sold in the past, empty ink cartridges. Here we go again, how do you value something that others will throw away. Can I give them a value of $0. 

Thanks for any help.

[coastaltechsolution]

Well, you had to pick them up? Time spent?

[toomuchstuffagain35]

COGS is what it COST you to acquire the goods, therefore yes, enter then as zero cost.

Value is what they're worth, and that will determined when (if) you sell them.

[toomuchstuffagain35]

If you're filing on Schedule C as a sole proprietor, IRS frowns on you putting a $ value on your time or labor when calculating COGS.

[2011retiredworker]

Thanks for replying. I did not have to pick them up. My sister brought them to my house!!

[2011retiredworker]

Thank you for your answer.

[lakefor94]

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@2011retiredworker wrote:

Thanks for replying. I did not have to pick them up. My sister brought them to my house!!

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Did you not tip or buy her lunch or something? 

[2011retiredworker]

That is what I thought too.

[dbfolks166mt]

If you're filing on Schedule C as a sole proprietor, IRS frowns on you putting a $ value on your time or labor when calculating COGS.

     COGS can include "direct labor" costs as long as you can tie the labor to an item or items. It is generally used in the production of an item where you can directly tie the cost to an item or items. The same goes for any materials or packing that can be directly associated with the production. If you cannot make the connection you can write it off elsewhere. 

[coastaltechsolution]

Well I certainly do not want them frowning at me 😁

[toomuchstuffagain35]

True if the goods sold are being 'manufactured', but even then the tax man might want to take a deeper look, unless you're a corp paying 'wages' for such.

[dbfolks166mt]

True if the goods sold are being 'manufactured', but even then the tax man might want to take a deeper look, unless you're a corp paying 'wages' for such.

     Agreed. I have sat through audits with clients where this came up and it was never a problem just like any other item the IRS wants details for during an audit. You just have to show the proof. COGS does not generally  trigger an audit unless the number is an abnormally large portion of the selling costs. 

[2011retiredworker]

So, I am interpreting this to mean that for the items like the old stock of printer ink I can place them in my inventory with cost of $0. Is this correct? Thank you.

Also, used printer ink? $0

Any item that is given to me free of charge no matter how much I know I can sell it for can be placed in my inventory with cost of $0?

[stainlessenginecovers]

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@coastaltechsolution wrote:

Well I certainly do not want them frowning at me 😁

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They ONLY frown when they can't 'get you' on something.

They Smile REAL BIG when 'they've got you'- leaving the 'frowning' for you...........

[slippinjimmy · Accepted solution]

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@2011retiredworker wrote:

So, I am interpreting this to mean that for the items like the old stock of printer ink I can place them in my inventory with cost of $0. Is this correct? Thank you.

Also, used printer ink? $0

Any item that is given to me free of charge no matter how much I know I can sell it for can be placed in my inventory with cost of $0?

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Yes!