Can I Write This Off?

Can I write off a storage unit for business inventory?

TL;DR

Yes, you can write off a storage unit used for business inventory as a business expense.

Detailed Answer

The cost of renting a storage unit for business inventory is deductible as a business expense if the inventory is directly related to your business operations. This is applicable if the storage unit is used exclusively for business purposes, such as storing products, materials, or supplies that are part of your business inventory. However, if the storage unit is used for personal items or mixed-use, only the portion used for business can be deducted.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 20 for Rent or Lease of Other Business Property

Real World Example

A small online retailer rents a storage unit to keep their inventory of clothing items. The monthly rental cost of the storage unit is $200, which is fully deductible as a business expense.

Calculation Required

A calculation is required for this deduction.

If the storage unit is used solely for business, the full rental cost is deductible. If it's partially used for personal storage, you must calculate the percentage used for business and apply that percentage to the total cost to determine the deductible amount.

Audit Risk & Documentation Tips

To minimize audit risk, keep the rental agreement, invoices, and proof of payment. Document the business use of the storage unit with photos or inventory lists, and ensure that the unit is not used for personal storage.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessRetailE-commerceManufacturing

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 7, 2025

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