i don't think it's as simple as filing an amended return for 2024. You seem to be changing accounting methods. That requires filing Form 3115. Expensing inventory in 2024 may have been allowable under the small business exception and reg
1.471-1(b) (3) Methods of accounting under the small business taxpayer exemption. A taxpayer eligible to use, and that chooses to use, the exemption described in paragraph (b) of this section may account for its inventory by either:
(i) Using a method that treats its inventory as non-incidental materials and supplies (section 471(c) NIMS inventory method), as described in paragraph (b)(4) of this section; or
(ii) Using the method for each item that is reflected in the taxpayer's applicable financial statement (AFS) (AFS section 471(c) inventory method); or, if the taxpayer does not have an AFS for the taxable year, the books and records of the taxpayer prepared in accordance with the taxpayer's accounting procedures, as defined in paragraph (b)(6)(ii) of this section (non-AFS section 471(c) inventory method).
(4) Inventory treated as non-incidental materials and supplies—(i) In general. The costs of inventory treated as non-incidental materials and supplies are recovered through cost of goods sold only in the taxable year in which the inventory is used or consumed in the taxpayer's business, or in the taxable year in which the taxpayer pays for or incurs the cost of the inventory, whichever is later. Inventory treated as non-incidental materials and supplies is used or consumed in the taxpayer's business in the taxable year in which the taxpayer provides the inventory to its customer. The costs of inventory are treated as non-incidental materials and supplies under this paragraph (b)(4) are not eligible for the de minimis safe harbor election under § 1.263(a)-1(f)(2
i don't think you had an applicable financial statement as defined in IRC 451(b)(3) { irc (471(c) redirects to 451)b) for the definition of AFS
(3)Applicable financial statement
For purposes of this subsection, the term “applicable financial statement” means—
(A)a financial statement which is certified as being prepared in accordance with generally accepted accounting principles and which is—
(i)a 10–K (or successor form), or annual statement to shareholders, required to be filed by the taxpayer with the United States Securities and Exchange Commission,
(ii)an audited financial statement of the taxpayer which is used for—
(I)credit purposes,
(II)reporting to shareholders, partners, or other proprietors, or to beneficiaries, or
(III)any other substantial nontax purpose,
but only if there is no statement of the taxpayer described in clause (i), or
(iii)filed by the taxpayer with any other Federal agency for purposes other than Federal tax purposes, but only if there is no statement of the taxpayer described in clause (i) or (ii),
perhaps others will offer their thoughts as to whether to amend, Form 3115 is required or continue to expemse year-end inventory
Not sure of the entity type that is reporting this activity. If you amend, it is possible that not only would income taxes be owed but penalties and interest. Consulting a professional is certainly advisable. because you may also have to change your overall method of accounting
Mandatory accrual accounting is tied to the handling of physical goods. Treasury regulations require any taxpayer for whom the production, purchase, or sale of merchandise is an income-producing factor to maintain an inventory system to clearly determine income. When inventories are necessary, a business must generally use the accrual method for its purchases and sales to match costs against revenue.
