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Comment by solson | Hacker News Reader

Inventory is a liability, not an asset and the tax code should reflect that. Taxing unsold inventory is simply one more thing that creates an unfair legal advantage for internet delivered content over traditional print content.

The government should not attempt to even the playing field by clamping down on technology and the internet. Instead it should eliminate taxes on unsold physical inventory and eliminate retail sales taxes and retail property taxes.

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> Instead it should eliminate taxes on unsold physical inventory

As the article says, Thor wasn't about tax on unsold physical inventory.

The company had inventory at cost $X. It decided that said inventory was worth $Y, for X>Y and tried to write off X-Y as a loss. The IRS said that the company's reason for deciding that the inventory was worth only $Y was bogus.

Yes it is a tax on unsold inventory. If I spend $100 on inventory, my business has $100 less cash. IRS rules do not allow my business to write off that cost until the goods are sold (COGS). If I do not sell that inventory, the IRS treats the unsold physical inventory the same as $100 cash for tax purposes, however my $100 is gone and I have no customers, so unless I destroy my inventory, I have to come up with tax payments for $100 I already spent. I've witnessed retailers smashing mass amounts of merchandise in compactors to avoid taxes on sunk cost. Some publishers have incinerated train loads of books for the same reason. Unsold inventory is a liability... Regardless of what the IRS says, inventory isn't worth anything until someone pays you for it, and you can never be sure if anyone will pay you for it or exactly what the price will be until the transaction occurs.

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