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 the individual tax return in TaxSlayer ProWeb, from the Federal Section select:
- Income
- Schedule C - Select the pencil icon to edit the Schedule C.
- Questions About the Operation of Your Business
- Method used to value closing inventory - Select "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 (17 characters max) description of the valuation method. If you need more room, add a preparer note to the return.
Additional Information: