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 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
they go in at current fmv.

then any income above current fmv is income to the business but it is part of your basis and calculations when you take money out (are you doing this as a corp or llc or just as a schedule c on your 1040 ?)

how much stuff are you "contributing" to your new businesss?

Ps. keep impeccable records.  state sales tax and IRS love to audit antique dealers.  (amount of cash transactions, payment fuzziness, etc)


what is your area of specialty?  I love antiques.  what state are you from?  

Tax Law (Questions About Taxes)

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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).

Experience

19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

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AICPA, CSCPA (Ct society), National Tax,

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a bunch.

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MS tax and other post graduate coursework

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variety including Summa Cum Laude

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I don't disclose or kiss and tell

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