Consignment Client

[Terry D EA]

This is my first consignement store tax return. This client is a Sch C client as this business is a sole proprietor. Where on the Schedule C do you report the amounts paid to the consignors? It isn't an expense so do you just list the gross receipts as the total amount received minus the amount paid to consignors and deduct the expenses from there. I am too tired to think or research and this is probably pretty clear and I am just missing it somewhere. Thanks!

[grandmabee]

I report all sales that I collect then under cost of goods in other I put the amount I paid out for consignment. That way I account for all money going thru my bank and hands

[GeneInAlabama]

I had a client like this and I just simply listed the amount paid to consignors as cost of goods sold. I looked at it as the merchandise belonging to the consignor until it is sold and then the shop buying the item from the consignor and sells it to the customer in one transaction. Looking at it this way, the shop has no inventory. The inventory belongs to each individual consignor.

[JohnH]

I also handle payment to consignors as purchases, with no opening or ending inventory calculation for the consigned merchandise. Some consignment shops will also purchase ancillary merchandise for resale alongside their consigned merchandise (jewelry in a clothing consignment shop, for example), so there may be some inventory accounting for shop-owned merchandise. But I've always understood the consigned merchandise to be non-inventory until it's sold, then it simply flows directly through COGS via "Purchases". .