Episode 46. Inventory Tax Strategy

Interested in Tax Strategy for your Business? Send us a message with your email address and we’ll help you get started!If you're an S corporation owner with inventory, you could be missing out on a MASSIVE tax deduction. Most business owners don't know this, but the Tax Cuts and Jobs Act created a loophole that lets you deduct 100% of your inventory - even the stuff you haven't sold yet. Your accountant probably isn't telling you about this.Here's how the old rules worked: You buy $100,000 in inventory, sell $30,000 worth, and you're stuck with a $70,000 ending inventory you CAN'T deduct. You only got to write off the $30,000 you actually sold. That's the old Section 471 rules that most CPAs are still following.But here's what changed: If your gross receipts are under $31 million (which makes you a "small business" in the IRS's eyes), you can now elect the non-AFS Section 471(c) method and deduct your ENTIRE inventory purchase immediately. That same $100,000 in inventory? 100% deductible. Even if $70,000 is still sitting in your warehouse.The secret is Form 3115 - a change in accounting method form. You file it with your tax return, IRS automatically approves it, and boom - you unlock this deduction. No waiting. No back and forth with the IRS.Want to know exactly how much you're missing? Pull up your last tax return, find Form 1125-A, and look at line 7. That's your ending inventory - money you couldn't deduct before but CAN deduct now using this strategy.🆓 Download FREE PDF: 7 Tax Strategies Every Business Owner MUST Know - https://www.7taxwriteoffs.com/?utm_source=podcast&utm_medium=inventorytaxstrategy🆓  Download FREE PDF: 7 Write-Offs Every S-Corporation Business Owner MUST Know:   https://7taxwriteoffs.com/?el=podcast&htrafficsource=buzzsprout*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, you are advised to consult with your attorney, accountant, tax preparer, and/or other advisor regarding your specific situation or your client’s specific situation. The information and all accompanying material are for your use and convenience only.