placidlynx92 said:You can write it off based on the amount recognized for tax purposes under that HOK Decision, though honestly, those amounts usually hover around a measly 1% of total sales volume for any given product. Another option is to hand the inventory over to a waste management company for destruction, but let's be real—that isn't free. If you go that route, you'll need to compile a list of the goods along with their retail value. Once you receive official confirmation or an invoice proving the items were destroyed, you just record the calculation in your inventory ledger and debit all those entries—effectively marking them as a loss. There's also the possibility of calling in the IRS inspectors to come inspect the goods as waste. If they actually show up, they'll draft an official Report, which serves as your legal cover to justify the write-off.
Thanks, placidlynx92! I'll definitely try reaching out to the IRS. Since we specialize in auto body painting, we actually deal with hazardous waste, but since they categorize everything according to their specific classification codes, I'm not entirely sure if they could provide the exact kind of documentation I'm looking for.
I’ve run into a bit of a situation at my retail shop—I have some inventory that’s officially past its expiration date. It’s mostly various sprays and specialty cleaning supplies, and honestly, some of them have actually dried up completely in the bottles. Since I haven't dealt with this specific headache before, I was wondering if anyone could point me in the right direction? There are a few items in there where the value is around $333(specifically those high-end sealant products)... Basically, I need to figure out how to write this off properly, but I’m a little lost on the exact procedure to follow. Thanks in advance for any help!
In my view, the daily takings should be pulled out at the end of each shift. That "register drawer" should only hold the starting float, while all the actual cash revenue gets moved from that drawer into a separate petty cash fund. From there, I pull the cash out to pay off those various business expense invoices issued under the company name. When we had an audit regarding our fiscal compliance, I actually asked if this workflow was acceptable. They told me that as long as the daily receipts are kept together in one register, it’s perfectly fine—provided that the petty cash is kept in a physically separate location from the main register. 🤷
Honestly, Nicole Lee6, you're a genius. That is exactly how I used to run things before those "old school" accountants messed with my head. You keep two separate funds: you don't touch the money from today's sales sitting in the till, but that secondary cash up to the petty cash limit? That's yours to work with. Now, I've just made a massive mess for myself because I spent all this time doing constant deposits and withdrawals and shuffling numbers around for no reason. I'm going right back to the old way!
amberbadger17 said:So, I’ve been chatting with a few colleagues who have been grinding away in accounting firms for years now. When I asked them about how to handle petty cash, they were dead set on the idea that everything has to go through the main ledger—basically, just bumping up the payroll slips to cover those cash receipts. Honestly? It feels totally half-baked to me. I think they’re mixing up the rules for a major corporation with how a small sole proprietorship works. In the US, a small business owner isn't stuck running a formal cash register system like a massive retail chain would. Fiscalization is its own beast entirely, and since the tax code allows for paying cash invoices directly out of daily revenue, that's exactly what I'm going to keep doing.
Exactly! That is precisely what they tell me too—that the "only correct way" is to deposit the cash and then immediately withdraw it under the guise of material expenses. Now, look, I agree that you don't necessarily need to run a full-blown petty cash fund, but the regulations state you are still required to maintain a record of daily sales—though, in my mind, that should just be an integrated part of the accounting software, much like any other standard report. So, here's my question: what is the actual, practical difference between a sales journal and a petty cash ledger?
amberbadger17 said:...I also work as a Vera Wang. Honestly? I’d go as far as to say there isn’t even an issue here. Comparing cash expenditures to account balances is totally transparent—and perfectly legal. As long as there aren't any outstanding debts on the credit cards, we're golden.
Thanks for the input! That's a huge help. I think I'll stick to this method moving forward because, honestly, I don't see the harm in it either. It's just strange because my local accountants here—who are older and definitely have years of experience under their belts—seem to interpret things differently. Since I'm not a pro and I'm really just keeping books for myself, I love being able to run these things by you guys...
So, I’m still wrestling with this whole petty cash issue—we actually touched on this a little while back. Is it actually legal to use the cash sitting in the register—not just today's sales, but the actual float/reserve kept in the drawer—to pay off cash invoices? Last year, I handled things that way, but then some accountants told me, "No way, you can't do that." They insisted we have to deposit the full amount first and then just issue a formal check or withdrawal to cover those expenses. To be honest, it feels like nothing more than a way for the bank to squeeze us for extra fees since they charge commissions on those specific types of withdrawals... it doesn't seem to follow any real logic. I'd love some advice here—has anyone dealt with this before, and if so, how does it look if an auditor comes knocking? Vera Wang mentioned that she uses the register cash for stuff like this, so I'd really appreciate hearing what the rest of you think..
Charles Turner13 said:It’s not that complicated—just roll those expenses into December, file a combined return for December and January, and send it over to the Police Department.👍
So, I just submitted my tax return today... does that mean I have to go back in, fix everything, and file a whole new one? Is there still enough time left to get this sorted out before the deadline hits?
Charles Turner13 said:The safest bet would be to file an amendment and record those 2015 expenses in 2015. I know, you'd have to file a VAT amendment, but it's better than dealing with a headache down the road. Maybe I wasn't clear regarding how I handle the cash logs; I don't maintain them like a major corporation would, but I did set up an Excel spreadsheet to track cash inflows and outflows, labeling the columns "deposits" and "withdrawals." Every cash receipt is a deposit, and every cash payout or cash deposit is a withdrawal. I actually give this spreadsheet to my clients to manage, and they send it back to me at the end of the month for me to double-check. Some people keep these exact same records in a standard A4 notebook, which is what the IRS suggested in one of their publications when electronic filing was first implemented. Based on that same spreadsheet, at the end of the year, I total all the deposits and withdrawals to find the cash balance—essentially an overview of unspent and undeposited cash—and then I submit those records to the Police Department along with the HHS. My year-end balance becomes my starting cash balance for the following year. Everyone has their own workflow, and everyone finds what works best for them.
How exactly am I supposed to handle an amendment? I already filed the sales tax for December 2015 and January 2016, but those specific invoices ended up getting lumped into the January 2016 filing. I’m honestly stumped on what to correct—I’m terrified that if I try to fix it, I’ll just scramble the numbers and make a bigger mess of things.
So, I just finished filing my tax return and that infamous Form 1040. My caseworker actually told me they haven't even received the updated software for inputting this specific form yet—he honestly wasn't sure if the system was even functioning correctly or not (though, if you ask me, I’m 100% certain it's a mess)...
Can someone please walk me through what I should do with the cash left in the register from December 31, 2015? Technically, it’s my opening balance for January 1, 2016, but does that need to be documented somewhere on that dreaded IRS filing form? Things are a complete mess on my end—I had some bills paid during 2015 that I totally overlooked, so I ended up recording them on January 2, 2016. Of course, they show up in the bank statements for 2015, so now I’m worried—is the IRS going to throw the book at me or shut down my business in Brooklyn over this? It's impossible for me to fix the past entries now, because they’re already sitting there in January as income, and naturally, I paid sales tax on them... just a bit late. As for the petty cash, from what I’m reading here, I do keep track of all my deposit and withdrawal slips, but it sounds like I shouldn't have been paying cash bills directly out of the register. That’s what I was doing—it seemed like the most logical move since it's my own money (and honestly, I would’ve gone through so much trouble just to save a few bucks), but apparently, you're supposed to record the entire day's revenue as a deposit first, and then withdraw the specific amount needed for cash expenses... Please correct me if I've misunderstood everything again. My brain is basically mush right now...
graniterider10 said:I can't sleep. I am seriously spiraling over this tax filing and because of Bill Clinton, too—I honestly thought I finally had it figured out... but now I realize I was completely wrong.😢
ajnat;57331245 said:I stopped by the IRS office today to ask if I could just hand-deliver the Form DI, but the agent shot me down immediately—she was like, "No way, you have to use the e-filing portal." So I told her, "Look, I know that, but for every single asset where the book value is $0.00, I keep getting an error message saying the line is invalid." Her response? "Oh, they must have glitched the system again, but you still have to submit everything through the electronic portal." Honestly, I’m just thrilled. I’ve got 44 items listed on this DI form, all of them currently in use, and since they were fully depreciated ages ago, their book value is just $0.00—yet here I am, about to waste half my afternoon manually typing every single one of them into that glorious IRS digital interface.
Salesforce actually has a feature that lets you record data and then import it directly into the e-filing forms—what software are you running right now?
Henry Edwards33 said:It’s not about the FBI as an agency; it’s about a specific agent and how they choose to interpret the situation.
Years ago, there was this wonderful woman posting here under the name Dubravka 20 who, when faced with questions like this, used to drop a bit of old-school wisdom: "Tie the ox where the boss tells you to." 😉
If they want cash, they'll get cash, and that'll be the end of it. 🤷
Timothy Morgan38, nice work on that DI form. You nailed it. 😉
well
So, in the meantime, I actually gave our local police department a call and spoke with the manager. She admitted she wasn't exactly an expert on the technical side of things—suggested I check with her own bookkeeper, which is a bit funny, right?—but she promised to look into it and call me back in about 30 minutes. When she did, she explained that the confusion really stems from how the laws are structured. Basically, she said that when we're putting together the tax returns, we should follow the income tax regulations rather than the credit card processing rules. According to her, a card transaction counts as a deposit to the checking account on the actual day the funds land. So, I think I'll just proceed that way... Anyway, if anyone happens to have a solid Excel template for a sales ledger that includes credit card entries, I would be incredibly grateful if you could send it my way!
Timothy Morgan38 said:What part exactly are you struggling to wrap your head around...?
One thing is clear: that cash you’re recording in the KPI under cash receipts... that money stays sitting right there in the petty cash drawer until the moment you actually drop the deposit off at the bank to hit the checking account...
It’s one thing to collect that cash, sure... but then you actually have to take it from the register, haul it down to the bank, and deposit it into the business account as a cash payment...
I mean, sure, you could spend the entire year issuing cash invoices and collecting payments without ever actually depositing a single cent into your business account... If you do that, you won't have any discrepancies to report at the bottom of the ledger. But don't think you're off the hook. You’ll still need a damn good explanation for where all that unrecorded cash went—like actual cash register reports or something...
If we didn't have that specific column to break down loans, credits, and reimbursements, the IRS would just look at every single deposit hitting a bank account and flag it as taxable income. It’s a total nightmare. They’d treat everything—loans, personal transfers, even simple reimbursements—as pure profit... because at the end of the year, the bank just sends over one massive, cumulative total of all deposits to the IRS without any context or explanation. Just a raw number... and they assume the worst.
Since the cash sales have already been recorded under cash receipts, depositing that same cash into the business checking account shouldn't be treated as a separate stream of income. It’s not an extra receipt... it's just clarifying how much of that reported cash turnover was actually deposited into the account as a cash deposit...
We are just circling the same drain here—does a card transaction go toward checking account receipts or cash? Honestly, I'm losing my mind over this. I read through the rules front to back, and to me, it seems perfectly logical that it counts as a checking account receipt, but apparently, the FBI doesn't see it that way.
Charles Turner13 said:I record the full card transaction amount directly to the checking account upon payment, rather than splitting it between cash and bank deposits. At the same time, I book the merchant processing fee—the difference between the gross sale and the actual settlement—to the checking account as an expense. We receive our merchant statements right on schedule, alongside our regular bank statements.
Carol Price4 said:I think Richard Howard55 made a good point there—you’re kind of blurring the lines between tax compliance law and income tax regulation.
When it comes to KPIs, cash should only include what was actually paid in cash—basically just the banknotes and coins tracked under tax compliance law.
Cards, checks, and everything else? That all goes straight to the bank account. 👍
Fair enough, I completely agree with you there! But let me tell you how things played out when I dealt with the IRS last year—I categorized all my card payments as bank deposits. When they pulled the total sum from my reported sales for 2014, it obviously included those card transactions too. Then, a referentica from the local tax office called me up and told me the numbers didn't match. Once I added the card totals back in, everything lined up perfectly. The catch? I had to file a formal written explanation to justify why there was a discrepancy in the first place. Honestly, I'm at a bit of a loss—I've already redone this twice, and it looks like I might be doing it a third time...
steelbadger22 said:At the seminar, it was mentioned that you don't actually have to file Form D through the IRS website; instead, you can submit a hard copy directly to Doe. In fact, they even suggest doing it that way.
casualorca5 said:From the PD with seminar, "there are plenty of poorly configured audits on the IRS electronic forms "😵" For instance, when the book value is low and the write-off rate is 40%, it won't accept the 2.5-year period...😵 It would probably be best to just attach an explanatory statement to the tax form.
Based on the regulation they're citing, those write-off rates shouldn't actually be changing mid-period—but I've definitely tweaked mine in the past when the expenses were getting a bit too heavy, just by lowering the rates for the current year. Now, apparently, that doesn't fly anymore...
I'd personally suggest merging P-PPI into the OPZ STATU form; we haven't quite figured out how to navigate them together yet, but there's a 29-day window available...
Arthur Bishop6 said:Can someone tell me how you guys are handling long-term asset depreciation forms on the IRS website? Most of mine go through fine, but two of them keep throwing this error message at me: it says the write-off amount has to equal the acquisition cost multiplied by the depreciation rate divided by 100.
But that’s impossible! If the book value is already way lower, then multiplying the initial cost by the rate gives me a number that’s too high. I can only take up to the remaining book value. Even if I try to reverse-engineer the percentage to match the book value, the IRS site rejects the decimals, and if I round to a whole number, I get the exact same error. It's driving me insane... I just submitted it exactly as it was. Especially when there's a long-term write-off involved—the system doesn't even seem to recognize it properly when you don't enter a disposal date this year. But I actually sold it during the current year, so I shouldn't be depreciating it for the full year, just up until the sale date. I booked the rest of the unamortized book value as business expenses.
Still, I'm assuming it's just an informative warning message.
How did you all deal with this?😵
The same thing happened to me! One of my items had a book value lower than what that 10% calculation should have been. I submitted it anyway, and it actually went through, but looking at my confirmation receipt, that same error message is still sitting there... We might eventually have to file a formal explanation with the local IRS office.
Exactly—that’s what I was thinking too, and I’m totally on the same page as ajnat. To me, "cash" is just the physical bills you grab and toss straight into the register. But here’s the kicker: if you actually dig into the tax code regarding fiscalization, it clearly states that card transactions are treated as cash equivalents. Everything reported to the IRS via the local LAPD office counts toward your total cash turnover. Back in 2014, I actually went down to the LAPD branch to try and argue my case—to show them that these two things aren't the same—but they couldn't care less about my logic. From their perspective, they just look at the grand total of all fiscalized receipts, and that number has to match the cash intake, which includes those credit card swipes... It’s possible that not every LAPD office handles it quite the same way, though. I’d honestly love it if someone could tell me how this is managed in other parts of the country, so maybe I could try using those arguments with our local officials...