We paid for inventory still at an overseas port. Is it our year-end inventory?
Inventory Overseas at Year-End: Who Owns It?. A specific owner scenario, the facts that change the answer, and the records needed for a tax review.
By AE Tax Advisors Team · Updated October 28, 2026
Determine ownership and risk under the purchase and shipping terms, not just physical location or payment date. Goods at a port can belong to different parties depending on the contract.
A specific business-owner situation
A business prepays an overseas manufacturer in December. Goods reach the port but do not clear customs until January. The inventory count, payable or deposit entry and insurance should follow a supported ownership analysis rather than whichever date gives the preferred deduction.
Illustrative example, not a client result.
What to establish before filing
- Read delivery and title provisions.
- Reconcile shipping, acceptance and customs dates.
- Match owned goods to the inventory and cost records.
Which fact changes the answer?
An advance on unfinished production differs from payment for completed goods whose ownership already transferred. Ask the supplier for status evidence rather than treating every shipment as one identical in-transit purchase.
A mistake to avoid
Prepayment does not by itself prove that the buyer owned finished goods before year-end.
Records that support the decision
- Purchase contract.
- Bill of lading.
- Shipping terms.
- Insurance and customs documents.
The decision to document
Prepare an in-transit inventory schedule approved by the preparer. Record the basis for inclusion or exclusion and reconcile it when the shipment arrives.
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Related questions
- We bought spare parts for our service fleet. Are they inventory, supplies or depreciable assets?
- Customers supply materials we process. Should their value appear in our inventory and sales?
Sources and editorial context
General educational information prepared with AI assistance. No individual professional review is claimed. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.