Fiscal 2005 was kinda tough for Wavelength...

...at least from a profit/loss perspective. The business lost a significant amount of money, most of which came in the form of an "inventory write-down." Let me explain.

Wavelength Clothing hit the web in June 2005, unveiling nine t-shirt designs and marketing them with Google's AdWords program (which I've described in a much-earlier post to this blog). As sales receipts came in, it quickly became clear that only 4 of the 9 designs were decent sellers. With impressive regularity, shoppers ignored the other 5 designs nearly completely...to this day, I've only sold one or two shirts with the So Money design, and the same is true for each of the designs in the WackWear collection, with the exception of W is for Wack.

Whether I should have seen this coming is the topic of another discussion. My point here is that - because no one wanted to buy them, even at severely discounted prices - the shirts with the unpopular designs were worth nothing. They had no cash value. And as a result, the money spent on them could be written off as a loss.

This loss combined with 2005's other expenses to total significantly more than the sales revenues brought in by the business during the year. The difference between total expenses and total sales is the amount I, as sole proprietor of Wavelength, was able to declare as a "business income or (loss)" on my tax return. In the end, the IRS had to cut me a substantial refund check.

Now, I don't mind paying taxes - in fact, I try to look at paying taxes as a duty and an honor, and I also think I get a pretty good return on the money I send to Uncle Sam. But this year I'm going to indulge myself and enjoy knowing that I took a little loot back out of W's war chest.