[mewzilla]

And get a load of this...

https://smallbusiness.chron.com/tax-line-used-inventory-shrinkage-77292.html

“...The Internal Revenue Service isn’t necessarily concerned with tracking the effects of shrinkage on your bottom line; its main concern is determining your taxable income. As a result, it doesn’t recognize shrinkage as a specific expense with its own line. Instead, it’s reported on tax forms as a miscellaneous or “other” expense under the cost of goods sold section...”

Whoakaaaay....

[Alberta's Child]

That’s exactly right. Shrink/theft is not an expense. It’s a lost opportunity for sale.

If I buy 100 widgets for $10 apiece and sell them for $20 apiece, my cost is $1,000 and my revenue is $2,000 … so I am taxed on the $1,000 profit.

If 10 of the widgets are stolen, then my cost is still $1,000 but my revenue is only $1,800 … which means I am paying taxes on the $800 profit.

So shrink/theft is only “tax deductible” to the extent that the cost of the merchandise is deductible. The IRS doesn’t distinguish between a widget that is stolen, a widget that is damaged, and a widget that simply doesn’t get sold for any reason.