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Our business is a Partnership LLC that does business as a direct sales company. The business started as a brick and mortar store. When the retail store closed, part of the inventory was put in a store for consignment. The inventory was not included in the partnership inventory for yearly taxes. The store proprietor never paid the partnership for the consignment inventory and is not making enough money to pay for sold items now. Does the partnership add the inventory back into their inventory and then right off the loss? ========>>>>>>>>>>>>> If there are any proceeds remaining, they must be distributed to LLC members. The process of liquidation must be reported to the IRS on Form 8594. If any LLC assets are not sold and are instead exchanged for other assets, this asset exchange must be reported to the IRS on Form 4797.
If not, where should this be written off ? ==========>>>>> If the business disposes of a group of assets that make up an entire trade or business, (rather than selling only some of the assets), both the seller and the buyer must report the transaction on Form 8594, and attach it to their returns for the year of sale. The form reports the total consideration (amount paid to the seller) for the assets. The form is also used to allocate this consideration among the classes of assets sold. The allocation, which is partly a function of negotiation between the buyer and seller, is used to determine the seller?s gain (or loss) for each class of assets. The IRS has created various asset classes for this purpose, and an allocation must follow this fixed order? You would also need a 4797 if you sold or disposed of Section 1231, 1245 or 1250 property.
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