Business Income and Expenses - Usborne Books

[rstgelais70]

My wife is an independent consultant for Usborne Books & More and I am trying to complete our 2019 Taxes via TurboTax Home & Business.

Essentially she receives income from her customer for the value of the purchased goods goods (i.e. books).  She then purchases the goods from Usborne (expense) and ships to the customer.   She receives a commission from Usborne for the sale.

On the income section I have included all of the income she received from customers to purchase the goods as well as the commission stated on the 1000-MISC.

I'm struggling where to state the associated expenses for buying the goods from Usborne?  Is this a business expense or is this considered inventory?  Her net income/expense for this transaction at the end of the year is zero as it is essentially a passthrough with the income coming from the commission.

[DavidD66]

You can do it a couple of ways, and they will result in the same net income, so it doesn't matter which one.  You can treat the purchase of books as inventory.  You will have a beginning balance of zero, and an ending balance of zero.  This will result in 100% of your Purchases being cost of goods sold..  Or, you can ignore inventory and list it under "Other".