Are at hand any charge issues beside selling stuff at a fraction of their expediency?
I owned a small business a few years ago and had an inventory of $50,000. The business didn't do so in good health and I found a full time job elsewhere.
I found a buyer ready to buy all the inventory for $5,000. (I'm prepared to take the loss because I'm only too busy to bother - plus I'm still paying for storage).
I will still declare my revenue surrounded by taxes, but are there any other regulatory issues near selling at a loss ?
I'm in Canada and the buyer is within the US.
Answers: Based on your "additional details", the US buyer may be considered as a related entertainment and therefore the CRA may quesiton whether the $5000 is the even-handed market plus (FMV) for the inventory (cost $50,000). Section 69 of the Cdn Income Tax Act states that if you sell the inventory as smaller number than the fair bazaar value to a related gala, you are deemed to hold received the fair open market value. In other words, the inventory loss may be smaller quantity or nil. Meanwhile, the US buyer is stuck with the low cost ($5,000) unless the selling agreemnt provides a price adjustment clause allowing for price adjustment contained by case the revenue authorities dispute near the selling price.
Businesses sell at a loss frequently.
Provided that this be an arm's length transaction, there shouldn't be any red flags going stale at the CRA. Its much more different when the buyer and seller are related (corporations).
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I found a buyer ready to buy all the inventory for $5,000. (I'm prepared to take the loss because I'm only too busy to bother - plus I'm still paying for storage).
I will still declare my revenue surrounded by taxes, but are there any other regulatory issues near selling at a loss ?
I'm in Canada and the buyer is within the US.
Answers: Based on your "additional details", the US buyer may be considered as a related entertainment and therefore the CRA may quesiton whether the $5000 is the even-handed market plus (FMV) for the inventory (cost $50,000). Section 69 of the Cdn Income Tax Act states that if you sell the inventory as smaller number than the fair bazaar value to a related gala, you are deemed to hold received the fair open market value. In other words, the inventory loss may be smaller quantity or nil. Meanwhile, the US buyer is stuck with the low cost ($5,000) unless the selling agreemnt provides a price adjustment clause allowing for price adjustment contained by case the revenue authorities dispute near the selling price.
Businesses sell at a loss frequently.
Provided that this be an arm's length transaction, there shouldn't be any red flags going stale at the CRA. Its much more different when the buyer and seller are related (corporations).