Tax Law (Questions About Taxes)/Inventory

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Question
I am starting a new business (Selling Antiques).  I have antiques that I have purchased over the years for personal use that I will be selling from my antique store.  How do I handle this for income tax purposes.  Do I include them in my business inventory?  If so, do I show them as purchases for this year, and do I put them in at cost.  If I sold them at a gain outside my business, I understand it would be a capital gain, but ordinary income if sold through my business.  Is this correct and what is the best way to handle this.

Answer
Peggy,

Thanks for your question.

It is a judgement call.  If you are selling the antiques through your business, they would be reported as business income. You would move them (figuratively) to the business books at your cost or fair market value as of the date transferred to the business, whichever is lower.  Record them as Inventory (Assets) and reflect a similar amount as your equity (investment) in the business.

If you are not selling them through the business, they would be treated as capital gain at the 28% collectibles rate.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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