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I have taken on a new client for the first time. They are a very small company structured as a C Corp.
They do about 800K a year in sales and hold about 50-60k in inventory. I took over last year and had them do an inventory count at year end. what I found is they had a lot of negative inventory at the time. I am now preparing the tax return and my COGS calculation for the 1125-A is $6,017 short of what is on the Income statement. How would this be handled when doing the tax return?
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No, the 6017 is not the swing in inventory. it is the different between taking the beg inv. plus purchases less ending inventory and comparing that to to GOGS number on the income statement. My income statement number is 6,017 higher then the calculation. They do a very bad job and processing purchases and sales orders so I am not surprised it is off. I am thinking the best resolution is to change my purchase number on the 1125-A so the calculation matches the income statement.
