eBay

lakeland_music · ‎11-20-2022

I had a buyer with one bad item in a pair, and I have to send a replacement.
It's only one part of a pair, one pair per bid, so I am just shipping the new item.
How do you handle this? Can you deduct the cost of the replacement?

stainlessenginecovers · ‎11-20-2022

Inventory $ at Beginning of Year plus Inventory $ Spent throughout the year minus Inventory $ at end of year.

That is the 'Cost of Goods' or 'Cost of Material' line on Sch C.

So, in essence, it IS deducted by having 'less' inventory $ than you would have had, had you not had to send that customer 'another' one.

Example. I start with 100 thingies at $5 each- so $500 start. I buy $2000 more worth of 'thingies'. I do inventory on Jan 1 and have $800 worth of thingies. $500+$2000 is $2500. $2500 minus $800 means I 'sold' $1700. $1700 is the answer (and amount used for COG/COM on Sch C)

onefootflipper · ‎11-20-2022

@stainlessenginecovers wrote:
Inventory $ at Beginning of Year plus Inventory $ Spent throughout the year minus Inventory $ at end of year.
That is the 'Cost of Goods' or 'Cost of Material' line on Sch C.

So, in essence, it IS deducted by having 'less' inventory $ than you would have had, had you not had to send that customer 'another' one.

Example. I start with 100 thingies at $5 each- so $500 start. I buy $2000 more worth of 'thingies'. I do inventory on Jan 1 and have $800 worth of thingies. $500+$2000 is $2500. $2500 minus $800 means I 'sold' $1700. $1700 is the answer (and amount used for COG/COM on Sch C)

Yeah, you really don't want to be figuring your taxes on a per item basis. You do what stainless says, although some people fully depreciate the cost up front and just keep their inventory total at zero.