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Kalman
New Member

When does a home business have to declare inventory?

 
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2 Replies
Carl
Level 15

When does a home business have to declare inventory?

If your business sells a physical product, then that product you sell is inventory and needs to be reported as such. That's because what *you* pay for the product you sell, is not deductible until the tax year you actually sell it. It flat out does not matter in what tax year you purchased it either.

 

When does a home business have to declare inventory?

"When does a home business have to declare inventory?"

 

When you no longer qualify as a small business taxpayer. 

 

https://www.irs.gov/publications/p538#en_US_201809_publink1000270701

 

 

Small business taxpayer.

You qualify as a small business taxpayer if you

  • Have average annual gross receipts of $25 million or less (indexed for inflation) for the 3 prior tax years, and

  • Are not a tax shelter (as defined in section 448(d)(3)).

 

As a small business taxpayer, you can treat inventory as nonincidental materials and supplies or follow a method of accounting that conforms to your applicable financial statement (if you do not have an AFS, you can account for inventory following your books and records. 

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