Would you have put this on Sch C?

[Abby Normal]

http://www.journalofaccountancy.com/issues/2016/jul/infrequent-sale-not-subject-to-self-employment-tax.html

First off, sounds like to me the bankruptcy trustee really screwed up if he valued 300k of scrap steel at zero. And I suppose after bankruptcy the basis in the steel was zero?

I really think this could have gone either way.

[Elrod]

 

That's a real toughy one....but as you said...agree... could have gone either way.

 

...

[JohnH]

I think the taxpayer got VERY lucky on this one.

I'm glad for him, but I'd have never predicted that outcome.  Certainly wouldn't suggest it to anyone as a course of action.

[mircpa]

I agree with court decision. Taxpayer passed majority of tests for inventory not being held for resale & not part of trade or business and it was one time event.

[RitaB]

He sold scrap 12 - 24 times a year for seven years.   Averaged $45k a year.  That was his only income.  I think he's a lucky dog, too.

[Abby Normal]

Fortunately, it's a very rare circumstance to have a lot of zero basis inventory left over after a business is closed. Most of the time you'd be selling at a loss.

[Max W]

Based on the courts analysis, it is the only decision that could have been reached. 

Three factors positive; 5 neutral; 0 negative.

[Abby Normal]

10 minutes ago, Max W said:

Based on the courts analysis, it is the only decision that could have been reached. 

Three factors positive; 5 neutral; 0 negative.

Yes, but all of those analysis are quite subjective. A different court could well have reached a different conclusion.

[Max W]

That goes without saying. Different judges could come up with different analyses.   My comment was on this court's decision.

[Roberts]

I'd call it schedule D, sale of assets.

 

[Abby Normal]

11 minutes ago, Roberts said:

I'd call it schedule D, sale of assets.

 

Hmmm. I like that thought!