Wholesale Club Purchases Can Be Deductable, But…


A semi-secret of many restaurants and stores is that a large part of their ingredients and inventory of items for sale are purchased at wholesale clubs, such as Costco and Sam’s Club. Such purchases are a testament to the favorable prices available at such clubs that are available to both businesses and individual shoppers.

There is nothing that prohibits a taxpayer from expensing items purchased from such clubs, or adding them to cost of goods sold for purposes of determining income from sale of inventory. However, there is a right way and wrong way to go about this. A recent Tax Court case illustrates the wrong way.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Charles (Chuck) Rubin, Gutter Chaves Josepher Rubin Forman Fleisher P.A. | Attorney Advertising

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