Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

I received a large amount of valuable gemstones through a

Customer Question
lawsuit. I sat on these...
I received a large amount of valuable gemstones through a lawsuit. I sat on these stones for a while, and then I determined to sell them for a profit. I registered a company for such with NY State, in 2012. I used my cost in obtaining the stones as the basis of filing a Schedule C with the IRS in 2012, and claiming that these costs were deductions.IRS had audited me, and they say that I cannot use all these costs as deductions for the 2012 return. They suggest that the acquisition costs should be amortized in some way.What does the tax law say about this situation?
Submitted: 1 year ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Answered in 5 minutes by:
4/26/2016
Financial Professional: emc011075, Tax adviser replied 1 year ago
emc011075
emc011075, Tax adviser
Category: Finance
Satisfied Customers: 3,335
Experience: IRS licensed Enrolled Agent and tax instructor
Verified
Hi. My name is ***** ***** I will be happy to help you. First, you shouldn't use Schedule C. Schedule C is used when you actively participating in generating income. The sale should have been reported on schedule D. What IRS is referring to is start up cost and that's only apply if you run a business.
Ask Your Own Finance Question
Customer reply replied 1 year ago
What deductions can I get with the Schedule D, for 2012 and going forward? And I was actively in participating in generating income in 2012, when I filed the Schedule C. So I believe that it was correct to file a Schedule C.
Financial Professional: emc011075, Tax adviser replied 1 year ago
Were you actively buying and selling Gemstones? From what you are describing I understand that you sold the gemstones, not that you were in business of buying, selling or reselling it.
Ask Your Own Finance Question
Customer reply replied 1 year ago
I was in the business of selling them. I was at that point doing marketing reseach and making selling contacts. I also attended a large gem show, in furtherance of sales.
Financial Professional: emc011075, Tax adviser replied 1 year ago
Ok. In that case your gemstones are considered your inventory and the cost is not deductible until sold. You need to know value of your inventory at the beginning of the year and at the end of the year, plus purchases you made. All other expenses will be operational expenses (utilities, rent and such) Up to 5K of your start up expenses can be deducted on the first year of business, the rest will have to be amortized over 15 years.
Ask Your Own Finance Question
Financial Professional: emc011075, Tax adviser replied 1 year ago
In that case you will need to amend your return and redo you Schedule C. Remove to cost from deduction for the gemstone cost and claim it as material or supplies or other costs (line 38 or 39 - it will make no difference). All expense you had before you business was up and running will be considered start up expenses, and you can deduct up to 5K of start up expenses on your 2012 return (assuming you didn't have more than 50K). The remaining start up expenses will be depreciated/amortized (same form, just different type). All expenses you had AFTER your business was up and running can be deducted as current expenses.
Ask Your Own Finance Question
Ask Rakhi Vasavada Your Own Question
Rakhi Vasavada
Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2,608
2,608 Satisfied Customers
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Rakhi Vasavada is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,920 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
I am single, divorced and own my home. 2017 my daughter and
I am single, divorced and own my home. 2017 my daughter and her family, 2 adults 3 children have lived with me while they build their home. They are custom home builders and file their own taxes. My q… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,061 satisfied customers
I run a Delaware single owner LLC operating out of Arizona.
I run a Delaware single owner LLC operating out of Arizona. We earn hundreds of thousands annually. Given the recent reform in tax code, would we save a lot of money converting to an S Corp?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,061 satisfied customers
Is the following link a Trustworthy app to invest in mutual
Is the following link a Trustworthy app to invest in mutual funds? https://robinhood.com/referral/ethanc123/?gclid=Cj0KCQiA-ebSBRC8ARIsAGuxJIrZH4jkVfJSxc_GvpqlOszZq2FrCQErIQv7hqqZLO1MuuQCFpH3fvAaAhB2E… read more
Carter McBride
Carter McBride
LLM
227 satisfied customers
I started and run a non-profit youth swim team. I have the
Hello, I started and run a non-profit youth swim team. I have the parents on the team serving as the board of directors, along with myself as the president/director. I'm also the coach and only one wo… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,777 satisfied customers
I own 2 homes in Hammond in. Free and clear worth around
I own 2 homes in Hammond in. Free and clear worth around 150k, total. Right now they net around 24k - expenses (8k) year, haven't filed income taxes in while on them or ref job (lost 2 years ago) cred… read more
taxmanrog
taxmanrog
Master\u0027s Degree
767 satisfied customers
I got a bonus amount and I would like to explore how I can
I got a bonus amount and I would like to explore how I can reduce my witholdings and subsequently the impact upon my tax return… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
I am trying to add an asset to my balance sheet, and it is a
I am trying to add an asset to my balance sheet, and it is a capital lease I am trying to figure out how to show it … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I loaned $30,000 to my son to buy a truck, 11 years ago, for
I loaned $30,000 to my son to buy a truck, 11 years ago, for his business. H e had been ill and that is why it took so long to pay it back. It is now paid I full. Can I legally forgive the interest on… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am on a non-immigrant visa and I was out of the US for
HiI am on a non-immigrant visa and I was out of the US for around 4 months in 2017. As I was out of US, I didn't have any health insurance. I am preparing my tax filing now and I want to specify the m… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
In 2017 my grandmother transferred the deed to a property to
In 2017 my grandmother transferred the deed to a property to me for $0 in the state of North Carolina. I reside full-time in California. Do I need to file a North Carolina income tax form or pay anyth… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,777 satisfied customers
I have a business corporation. If I want to take out some
Second opinion] I have a business corporation. If I want to take out some money from the profit and write myself a check to deposit into my personal account, will I have to include that as schedule C … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If I pay 100,000 for land and then about 45000 in various
If I pay 100,000 for land and then about 45000 in various costs but have deducted thing like Loan interest, insurance, Taxes of say 40,000. What is my basis 145,000 or 145,000 minus the deducted expen… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
This is an EFIN related question! Sure, so I am an ERO that
Sure, so I am an ERO that has racked up civil penalties; which has resulted in my EFIN being deactivated How can I cure this and fix my suitability issues … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I would like to know if it's more beneficial to file as
Hello, I would like to know if it's more beneficial to file as married jointly or married separately since I am employed and my husband is self employed. … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,061 satisfied customers
I have a website that sells bitcoins and takes Canadian
Hi, I have a website that sells bitcoins and takes Canadian dollars. I take a 10% commission. I was wondering if I will need to charge GST for this service. I already signed up for a GST account. The … read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
If a pass through entity (Scorp or LLc) files taxes on
If a pass through entity (Scorp or LLc) files taxes on accrual basis, do they still have to have them paid by the end of the year so they don't pay penalties?e.g. 500k net income for 2017 shown on acc… read more
Carter McBride
Carter McBride
LLM
227 satisfied customers
Move to another IRA. I currently have Rollover IRA with one
Move to another IRA. I currently have Rollover IRA with one investment company, and want to move all my funds to another investment company, and close the account with the first investment company. I … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,061 satisfied customers
When a company experiences a large number of shares sold off
When a company experiences a large number of shares sold off around 5 million out of 46,000,000 at 8.40 average per share, does this lower that companies capital? Common shares were sold… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,061 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x