Final Schedule C

[mdmcfarland]

Last minute client (daughter-in-law) had Schedule C in prior years (Mary Kay). She had no sales and no purchases in 2007 and won't in the future. She had an ending balance in 2006 of $397. What inventory she had, was either switched to her own use or discarded as outdated.

How do I show her final Schedule C and not show the loss?

[jklcpa]

Inventory withdrawn for personal use can either be shown as an increase to sales or a reduction of purchases. Also, the write off of obsolete inventory would also be a reduction of purchases. I don't like the idea of showing the w/d of inv as sales. I'd attach a statement detailing the 2 "reductions" to the purchases line. Since the client had no purchases, the purchase line will be negative $397 and that will zero out the beginning inventory, so cost of sales will be -0-, and the Sch C will not show a loss.