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Financial Planning / Tax Strategies
|Subject: Re: Inventory is income?||Date: 9/25/2012 12:31 PM|
|Author: ptheland||Number: 116663 of 125005|
What the example boiled down to (in my apparently muddled thinking) is that the poster was saying the equivalent of "unsold inventory = taxable income".
That explanation would be wrong. So that might be why you're confused.
What they should have been saying is "unsold inventory = a tax deduction that is deferred until the inventory is sold".
Unsold inventory is not taxable income. Unsold inventory is eventually a deductible expense, but its just not deductible until it's sold. Once the inventory is sold, you can claim a deduction for the cost of the inventory.
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