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T
tklucky13
Level 1
July 15, 2020
Question

Inventory

  • July 15, 2020
  • 1 reply
  • 6 views

Has anyone worked with a client who owns a hemp business?  They purchased $150,000 in hemp and $40,000 of it was moldy and could not be used.  Can they take a loss on the Schedule C?

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1 reply

T
TaxGuyBill
Level 15
July 15, 2020

Yes the expense of the $150,000 can be taken on the tax return.  That full amount can be used as a deduction, whether or not there is income from $40,000 of it.  But you don't enter the $40,000 anywhere because you are already getting a deduction from the $150,000.  The year-end inventory count will give it the deduction.

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