Tax Audit - Retail Gift Shop Industry Edition Ebook

Retail Gift Shop Industry

• Individuals who have worked exclusively as employees in the retail gift shop industry who begin their own business

• Hobbies that evolve into businesses

• Retirees who begin their own business

• A gift shop taxpayer will be required to use the accrual basis of accounting for income and expenses with regard to industry

• The most valuable asset of a retail gift shop is inventory

• Generally, smaller retail gift shops use either the cost method or the lower of cost or market to determine the value of inventory. Larger shops use the retail method.

• The area of gift certificates and credit vouchers (issued in place of a cash refund) is one where an examiner may find the retail gift shop deferring income beyond the point where it should be reported.

• Accounts of retail gift shops should be analyzed to determine whether the retail gift shop under examination has service departments and, if so, how income and expense is booked.

• Both income and expenses should be treated as past of the cost of sales calculation

• Consignments of merchandise to others to sell are not sales since the title of merchandise remains with the consignor

• AND THERE'S MUCH, MUCH MORE...

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