In 2018, I learned from this community that production expenses that I incur during this tax year for a book that will not be self-published until the next tax year should be added to the total value of my inventory. Correct?
Here I am doing my taxes for 2019 and realizing that I’m not entirely sure how to do that. I have beginning and ending inventory values. Should I simply add this year’s expenses for the new book to the difference between those values?
Key info: I have 3 books in play, two of which have been selling all year, and one is still in production.
So, is this correct? (numbers are fake obviously)…
2019 beginning inventory:
(Quantity of Book1 in inventory x production cost per unit) + (#Book2 in inventory x production cost per unit) = 200
Happenings during the 2019 year:
Book1 cost per unit x #books sold…cost of Book1 sold = 20
Book2 cost per unit x #books sold… cost of Book2 sold = 30
Book3…(spent 40 on design work to prepare for publication in 2020) = 40
2019 ending inventory:
(200 - (20+30)) +40 = 190
So, on the TurboTax page titled “Let’s get the value of your inventory,” I would enter:
Beginning of 2019: 200
End of 2019: 190
Correct?
Then, when I click to the next TurboTax page, it says “Let’s get the costs of your goods.”
Cost of Purchases = 40
Purchases for Personal Use = 0
Labor Costs = 0
Materials/Supplies = 0
Other costs = 0
Correct?
Then, on the next TurboTax page, it says “OK, Here is your business gross profit”
Total Sales = let’s say 500
Cost of Goods Sold = (200 + 40) -190 = 50
Gross Profit = 450
Correct? Thanks for feedback!!