Tax Issue - Provisional Reimbursement For "Lost" Items - Income or Loan?

Amazon loses stuff, you complain, they reimburse.

But later, they will certainly find your stuff, and claw back the reimbursement.

So, the reimbursement is not really “income”, but instead a provisional credit, which is a loan at zero interest.

Has anyone taken this sharp a pencil to the “cost of goods sold” and “costs of sales” part of their books, and subtracted the amounts paid in reimbursement, or does everyone take the income, and then book any clawback as a loss against the year in which the clawback happens?

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Income I believe, But I’m not an accountant and I didn’t stay at a holiday in last night

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It is under Income > Amazon Sales > Inventory Credits

Income

-Amazon Sales
–Amazon Product Sales
–Discounts and Refunds
–Inventory Credits
–Other Fee Income
–Promotional Rebates
–Shipping Fee Income


Total Amazon Sales


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This is how we do it

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We do it quick and dirty at the end of the year simply using the shipment screen. Any short receipts are losses. We also capture those screens, at that time, as the documentation behind the write off in case of audit.

FBA does a good job by us though. 99.94% accurate.

What gets lost behind the scenes is not worth our time to look at. COGS are very low in my world. This is the same reason we don’t fight the short counts when they initially happen. Most initial shorts are eventually found and the time it takes to fight it ain’t worth it. If we sold baby grand pianos on Amazon it would be handled a little more carefully.

Cost of business when making a deal with the devil, AKA , Amazon.

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