Schedule C; How to close out inventory when ending business?

Question

I have had a business for several years and shut it down in 2013. Always using cash basis on Schedule C to account for it. Sales tax is not an issue, all of the goods were purchased with state sales tax paid up front to the distributor.
There was ending inventory that I want to dispose of (accounting wise) that was converted to personal use. What is the best way to account for this? It is not part of the sales but it is not really expired/thrown away either.

My thought was to sell it to myself at cost to show real revenues to the business. Is there a simpler way or am I putting too much faith in our tax code to have something in place to handle this?

Thanks in advance

ninasgramma · Accepted Answer

Follow the lines to figure Cost of Goods Sold in Schedule C.

Your ending inventory is zero.  The amount you are converting to personal use is subtracted as "Withdrawn from personal use" on Line 36.

You can't sell your own inventory to yourself and count it as income.

tro · Answer

you can't sell it to yourself, just like you can't lease your rental property to yourself
if you have inventory left that you will convert to personal use, there is no loss nor gain

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Schedule C; How to close out inventory when ending business?

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