I am closing my business this year and I have left over product that I couldn't sell. Where do I claim this amount as I have to pretty much toss it out.

 

Investors and rental owners

You can consider this product "Shrinkage" which is an account that increases Cost of Goods Sold. Under this result, you would be reporting a higher expense for throwing out your product on your tax return. To do this: log into TurboTax Online:

> Choose your return for the year

> Under the "Find" magnifying glass, search "Business or Professional Activities" and click it.

> You will then choose your business, and click the "edit" button beside the one in question.

> Choose "Income and Inventory", then "Skip Income"

> Then you will be in the Inventory section. You will add the cost of all useless product and have two choices in how you can go about it.

1 - You can put the total cost as a difference between beginning inventory and ending inventory.

2 - You can simply put the total cost in "Other Costs".

Make sure to click "Continue" so that your information is saved. For more information, check out: Canada Revenue Agency - Inventory and Cost of Goods Sold

 

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