Marijuana Collectives Can Deduct POT as "COGS" | Marijuana.com

Marijuana Collectives Can Deduct POT as "COGS" | Marijuana.com
Just as a means of keeping everyone involved in this case on their toes… And scratching their head. Judge Krupa after stating all the reasons that the vapor room could not deduct the cost of goods sold went on to explain how the vapor room should still be allowed to subtract his “costs of goods sold.” Of course his normal “COGS” was primarily the bulk of his marijuana purchases for the resale in his collective. As with any normal business your “cost of goods sold” is generally allowed to be subtracted from your gross receipts, in order to determine the taxpayers IRS responsibility. As the vapor room room reported its costs of goods sold totaled a little under $1 million for the tax year of 2004… And approximately 2.7 million for the 2005 tax year. When looking at his total income that $3.8 million encompassed approximately 90% of his businesses gross revenue. Declaring that the vapor rooms tax records had been unverified and as such were not to be trusted, Judge Krupa decided that the vapor rooms  ”COGS” was more likely in the neighborhood of 75% of their total operating expense for both years.