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I have a small Nevada LLC that I'm dissolving. I used it for ecommerce, but business has been bad the last year and now I've got some inventory left over. Because all of my inventory was bought for resell, no sales tax was paid for it, and now I'm trying to decide how to minimize any sales and use tax that needs to be paid on the remaining inventory (money is extremely tight and I'd rather avoid paying $500 in use tax).

Does the initial cost of the inventory affect sales tax if I sell the items for less than I originally paid for them? For example, the stuff I have leftover cost about $6,000. If I simply sell the remaining inventory to myself as an individual at a ridiculously discounted price (say for $100, call it liquidation), will I only have to pay sales tax on that lower price or will I owe the state more because no sales tax was paid on the original $6,000 inventory purchase?

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This would by definition be a form of tax evasion. You could discount the goods, but only up to a point as defined by your local commerce laws. The general rule of thumb (superseded by local/state laws) is that you can discount the items to the 'at cost' value (eg. its worth $10, you bought it for $15, you can sell it to yourself for $10).

The fact that you're selling to yourself and are the sole proprietor of the company (or one of the owners) will raise red flags with the tax governing bodies involved (NV state, IRS, local tax body). It will be downright impossible to pass it off as a liquidation as you're the only individual involved, both as an owner of the liquidating company, and as the purchaser of the liquidated goods.

  • gotcha. Makes sense, unfortunately. Instead, could I just take possession of the remaining inventory as a company asset being distributed to the members upon dissolution and then pay use taxes as an individual at some point in the future when I take it to the dump? – CMB Mar 20 at 21:02
  • I'm not aware of that violating any laws, but I would still consult a lawyer regarding local and state laws around liquidated goods. – GOATNine Mar 21 at 12:00

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