Tim Shoppa wrote:
The Eternal Squire wrote:
This is to determine initial corporate inventory.

My advice here is to choose the method that gives you an answer of
zero. Otherwise you have to deal with inventory taxes (depending on
locality).

The fair market
value of an item is defined as the price a disinterested party is
willing to pay for it in an arm's length transaction. So that value
of stripped components actually isn't negative, this is why salvage
works: it creates value by selling saleable parts from a valueless
scrapped object.

If necessary, do not create taxable value until you can sell it.
"Creating value" that you have to pay inventory taxes on is foolish.

Yes, I had better look. I thought though that inventory taxes take
effect on an increase in inventory... because otherwise you would
have to pay taxes on the same inventory year after year. Do people
really do that?


The folks that actually do this stuff for a living (usually meager, but
they seem to enjoy it) quickly learn that if you aren't turning over
your inventory several times a year, that you aren't making any money.


Okay.

Realistically the IRS may very well classify your attempted business
activities as a hobby if all your components sit in boxes for years
without getting sold.

Actually, I want to sell my used stuff and replace with new. I'm also
sitting on top of a pile of (s)crap that I hope I can use to raise
funds.

And classifying it yourself as a hobby may be a good thing too, at least
psychologically.

I just got laid off by an engineering company some months ago. I've
switched
roles with my wife, so that now I am a full time homemaker and parent
for my
two year old. That part is wonderful, but I want to make sure my prior
skills
and drive will not go to a total waste. I have found the possibilities
for
employment as a software engineering to be rather dismal to do the
latest
mania regarding offshoring.

I'd rather go into business for myself and develop some type of
intellectual property, whether it be software, hardware, or
entertainment. To this end I filed papers to start
an LLC. I am going to elect taxation as a C corporation, because I
want its finances
totally seperate from mine, reinforcing the liability shield. If a C
corporation does not
earn very much in a short period of time but stays out of debt in the
long term, this is not a hobby, just a very slowly growing business.

Some localities also tax personal (non-business-inventory) property and
I also advise you to not inflate this number either!

Inflate nothing! I just want to know what the right thing is so that I
can do
it.

Important note: I am not in any way a business or tax advisor. But I do
know (through the school of hard knocks) what I have to do to keep my
hobbies/obsessions from becoming some stupid time-and-money-sink
business model :-). That doesn't mean I don't do them, it just means
that I keep them in a separate compartment in my head full of holes.

Tim.

And I've got nothing better to do right now than to take what was my
hobby and
try to make something out of it.. I have a fair amount of weekly time
and the
rest of my life to decide what to do with it. I have plenty of
(s)crap. I have
a little bit of money. But what I am suffering most from is a lack of
a decent idea.

The Eternal Squire

One way, I suppose, would be to ask how much a disinterested party like
yourself(s)
would be willing to pay. Another, I suppose, would be to treat each
part as a piece of
clothing and assign it 1/2 to 1/4 retail value as a used article.

Opinions?
=====================
The quality of components from scrapped equipment can be doubtful
,especially when the said components are removed while being exposed to a
high temperature.
I do use components from scrapped equipment ,but only when I remove them
myself ,knowing how hot they were upon removal . If removal sometimes takes
rather long time , I discard the freed components .
Moreover I always check freed components for stability and if OK only use
them for simple (auxilliary) equipment.
Frank GM0CSZ / KN6WH