I'm trying to sort this out and have spent a long time reading all the previous questions, an irs.gov pubs.
I'm a sole proprietor (different issue I'm fixing this year).
Turbo tax home and business tells me I need to report inventory if my gross sales is over $1M.
The forums here say I only need to do this is my average over each of the last 3 years is $1M/year.
The forums also say, quoting IRS pub 334 that I don't need to report inventory unless I'm over $26M.
I verified IRS pub 334 does say that and makes no mention of the $1M limit. It says "small businesses" are exempt if under $26M. However Turbo Tax post 1 day ago, quoting this says "large businesses" when referring to $26M.
Here's why I need to know:
My average gross for last 3 years is under $1M/year, meaning if the average is the rule, I'm not required to report.
2020 alone was over $1M, so if I have to go year by year, and $1M is the limit - I'm required to report.
If the $26M is the limit then I'm obviously exempt from reporting inventory.
Which is it?
And I understand the whole bit about I need to report all expenses, etc. It's just a matter of if I report them under inventory or other expenses.
Please help as I'm getting near the "I don't care anymore" point.
Section 471(c) of the Code exempts small businesses.
Section 448(c)(1) of the Code defines small businesses as those whose average annual gross receipts for the past three years do not exceed $25M.