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How to declare income if inventory is paid in cash
I purchase many things off Craigslist in cash and sell them on eBay and Amazon. I taken in about $60,000 from both sites but only a profit of about $10,000. How do I deduct my cost of inventory so that I pay my 15% self employed tax on the $10,000 and not $60,000.
There's no way the IRS could ask me to pay on the full $60,000, right? I mean they couldn't assume my inventory came out of thin air. There is just no paper trail unfortunately. |
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You need to establish a ledger that shows what you paid for each item and WHEN you bought them.
Henceforth, when you pay for something, get a dated receipt that shows what was apid and for what was purchased. What you paid is COST OF GOODS SOLD, which is recorded on Schedule C. If this is Greek to you, then you need to get professional tax help. If you want MY professional help, email me at the email address in my profile (if you cannot see it below). |
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