We need to make sure we know what inventory means. Here are some questions:
- Did you buy it with the intention of reselling it?
- Have you changed your mind about that?
- Are you using it as a demo unit?
- Have you given it to someone to use but you're still holding it on the books as inventory?
- If you're using it as a display item, do you intend to sell it for pretty close to the original price?
Unfortunately, there are other taxes which may apply - such as personal property taxes (in some states).
But with regard to sales and use taxes, you should be off the hook. Just watch your answers to those five questions. Because if you answer wrong, then you've used the inventory and you will owe use tax.
More about withdrawals from inventory here.
Sales Tax Guy
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