Stephen:
There you go again, dispelling a popular urban myth!
Your analysis is flawless. Of course you are better off to sell
something for a dollar, rather than pay to have it hauled off as
rubbish. I think you tried to dispel the notion that tax benefits drove
Olympus's decision to junk T45 spare parts. I suspect management gave
the orders, and never thought to ask the warehouse employees if they had
a better idea to dispose of "obsolete" stocks.
I think the number of CEOs, CFOs, and COOs hauled off in handcuffs has
undermined the public's view of our business leaders. I watch CNBC
every day at lunch. Lately, the "perp walk" of the latest disgraced
former executive has become the featured noon-time event.
Bill Stanke, CPA
Stephen Troy wrote:
>
> Several snips:
>
> >The other issue is whether you can sell written off stocks. The tax
> authorities
> >don't take kindly to giving tax allowances for writing down, followed by
> >seeing income for those same stocks. It means that you have to sell them
> >dirt cheap, at which point the skip becomes more economic.
>
> >Unfortunately, the stock market and the western tax regime make it more than
> >likely to happen again. My company has just had to do the same thing with
> >spare parts for machinery we no longer use.
>
> Can we all please stop trying to be tax experts here? The above statements
> are inaccurate (at best). You will ALWAYS have more money in your pocket
> AFTER TAX by selling something rather than by throwing it away.
>
> ALWAYS.
>
> 1000f the time.
>
> >From an economic perspective, there is no reason whatsoever to throw
> something away. There may be valid business reasons, but there are no
> strictly financial/tax reasons.
>
> By the way, there are limitations for tax deductions on "writing down"
> inventory here in the US. Without going into specifics, you can generally
> only write down inventory to a value that you have offered to sell it at
> within 30 days, and NEVER below scrap value. Therefore, you can write it
> down only if you can prove you can only sell it at that (lower) price.
> Before you argue with me, read IRS Reg. 1.471-2(c). I do this for a living
> and deal with it every month, so it bothers me to constantly see people
> spread nonsense about "throwing old inventory away for tax reasons."
>
> Steve Troy (CPA, MBA)
>
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