Accounting for grading Costs. Expense or allocate to inventory cost?

Cougar1978

Schedule C deduction - fees. Or do u allocate to inventory cost?

Under the matching concept I favor allocating to inventory cost but reducing tax bill appeals more to me.

BillJones

If the certification is successful, it should be added to the cost of the coin. The certification fee places the coin in a holder which adds to its market value in almost all cases.

If the coin is a fake that can't be placed in a holder, then it should be charged as a period expense. The cost of showing that the piece is not genuine is a cost of doing business. It is not an expenditure that provides a benefit to be business going forward.

This concept applies to be cost basis for the collector. You eat the certification cost if the coin is a fake. You add it to the the cost basis of the coin if it is genuine.

Cameonut

I always felt that grading fees were part of the cost of inventory.

mbogoman

@BillJones said:
If the certification is successful, it should be added to the cost of the coin. The certification fee places the coin in a holder which adds to its market value in almost all cases.

If the coin is a fake that can't be placed in a holder, then it should be charged as a period expense. The cost of showing that the piece is not genuine is a cost of doing business. It is not an expenditure that provides a benefit to be business going forward.

This concept applies to be cost basis for the collector. You eat the certification cost if the coin is a fake. You add it to the the cost basis of the coin if it is genuine.

This is how I handle it, too.

ricko

Tax time is approaching... time to get the financial ducks in a row.... Cheers, RickO

CCGGG

Never really thought much about it but I suppose it's inventory costs. In any case, for the coins I'm buying these days, it's a trivial component of the cost.

logger7

There are lots of ways to do taxes on coins; for some years HR Block and even established accountants did it as regular investments with all permissible deductions. Then when the IRS wanted it as self employment, we adapted to that with no increased tax cost to speak of. Don't forget shipping, insurance, and other hidden costs.

AUandAG

I expense it as a general cost of doing business. Deduction in the year occurred.

bob

I would not argue against making it a part of the coin's cost. That would be acceptable to me if enough turns of inventory take place every year. Most likely be expensed in the year occurred anyway.
Keep in mind that I'm really old school with a degree in Acct from 1971. I still use green paper spread sheets for my accounting purposes.

bob

Coin Finder

As an LLC, I expense it..."successful" or not.

Boosibri

My first job was as a cost accountant. I’d capitalize it to inventory and expense when sold based on GAAP

topstuf

I stuck EVERY incidental cost onto my coin coding.
Right or wrong, it worked for me.

Never tried bullion changes.
Well, yes I did.
Our bookkeeping was "lower of cost OR market" so it got inventoried at the present spot price.

topstuf

DAMN it makes me queasy to even THINK about .....inventory time..... at the coin shop.