IRS Reject Code SC-F1040-007
If Schedule C (Form 1040) Line 33c checkbox 'OtherClosingInventoryMethodInd' is checked, then "Other Method Used To Value Closing Inventory Statement" [OtherMethodUsedToValueClosingInventoryStatement] must be attached.
This reject occurs when the inventory valuation method "Other" has been chosen on Schedule C, but no explanation of the "other" method has been provided. The IRS requires an explanation if an inventory valuation method other than either Cost or Lower of Cost or Market has been chosen.
The default valuation method is Cost, and if the business doesn't have inventory it's okay to leave this as Cost. Changing to Other implies the business has inventory.
To correct this reject in TaxSlayer Pro, from the Main Menu of the 1040 select:
- Income
- Business Income or Loss - Select to edit.
- Answer Schedule C Questions
- Method Used to Value Closing Inventory - Change this to "Cost" if the business doesn't have inventory. If the business does carry inventory, but its valuation method is not Cost or Lower of Cost or Market, select Other, then enter a short description of the valuation method, then finally a longer explanation.
Additional Information: