My wife has had a small antique/collectible resale business for the past 10 years. The business has been mostly stagnant the past 3 years and totally stagnant this past year with no sales to report. She has about $3100 in inventory that has stayed the same all year (beginning and ending value is the same). Once I plugged the ending inventory value into TurboTax, our tax bill went up about $800 dollars. I am having a hard time getting my head around that. No sales and no new purchases sounds like no tax to me. Why is this? Any ideas?
NEVER MIND...answer found. TurboTax was assuming we had taken a loss on the entire inventory and deducted the loss from our tax due. As soon as I plugged in the ending inventory number, the loss went away and our tax due went up. An aggravating misunderstanding.