I am half owner (stock holder) in a C corp that ran a SCUBA Diving shop. After a few years of poor sales and an increase in rent we closed the doors. My partner who actually ran the shop (I work full time elsewhere) kept the inventory at his house in his garage, shed and backyard covered with tarps. He attempted to sell it online for a few years with no real sales to show. The business
has operated at a loss for at least 4 years. My partner died while diving last year. After several years of operating at a loss, an aging inventory (no new inventory has been ordered for 4 years) and no one to run the business, I disolved the business last year. The State Board of Equalization contacted me and said I owe tax on the inventory. I tried to sell it to a few shops with no luck but one agreed to seel it if we divided the profit. He has collected sales tax on the little he has sold in the last year. I'm not sure why but my partner had the inventory valuated for tax and insurance purposes at about $100,000. From the inventory list it is more like $75,000 at original cost. With aging neoprene and outdated styles I'd guess I could get $25-$50K if I had time or a place to sell it. I have not been able to even get an offer from any of the shops I checked with to get a minimum value although I'm still trying to get a number. I would be happy to get $10k as a whole lot.
My questions are:
1. If the shop I have the inventory at is collecting sales tax do I still need to pay use tax (the business has been officially closed)?
2. Assuming I finally get a valuation from one or more dive shops, can I use that as a valuation or do I need to pay for a formal valuation?
3. If I get a new business license can I avoid paying sales/use tax until it actually sells?
4. Is there some other way to make this go away? I'd rather destroy the inventory and save $10k of tax and have to try and sell the inventory to get my money back.