Sunday, April 6, 2008

Items that are not Income

If you are in business for yourself, there are some cases the property or money you receive is not income. There are a couple of instances below that would apply:

Appreciation- Increase in value of your property are not income until you realize the increases through a sale or other taxable disposition.

Consignment- Consignment of merchandise to others to sell for you are not sales. The titles of merchandise remains with you, the consignor even after the consignee possesses the merchandise.Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Merchandise you have shipped out on consignment is included in your inventory or until it is sold.

Do not include merchandise you receive on consignment in your inventory. Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission , depending upon the method of accounting your use.

1 comment:

cinnamongirls said...

I have a piece of real estate that I purchased 3 years ago. Today, it is worth less than I paid for it. If I sell, can I take the sale as a 'loss' and get a credit on my taxes? I paid for cash for the property.