What is the Thor Power Tools decision and how did it affect publishing?
Kevin O’Donnell has provided a very clear explanation, available at http://www.sfwa.org/bulletin/articles/thor.htm. Contrary to what you may have heard, this has nothing to do with inventory taxes. It has to do with claiming a loss on inventory that is expected to become obsolete before it can be sold. This loss reduces the manufacturer’s *income* tax. The IRS ruled that the manufacturer can’t claim the loss on the overstock until the market value actually falls below the manufacturing cost. They want to claim the loss as soon as possible, because a dollar now is worth more than a dollar in the future (because it can be invested in the mean time). Not to mention the cost of warehousing goods that you don’t expect to sell. If the product is currently selling at a profit, the only way to claim the loss on the overstock is to scrap it.
