Schedule C Question and Right off

[ZachV]

Good day,

I posted this once but realized I did not provide the correct clarification. 

This is in regards to my SMLLC and the “Does your business have inventory or cost of goods sold?” Last year, I went with this method, but I want to make sure I am doing it correctly. For the 2022 tax year, I sold photography calendars. Under Cost of Goods Sold Line 36 I stated I spent $1000 to purchase the calendars and had an inventory cost of $40 line 39 at the end of the year, which I did not sell until 2023. Now I am doing taxes for the 2023 tax year, I spent another $1400 on calendars $1100 my cost, of which I sold in 2023, and $300 my cost of calendars in 2024. I ended up making around $6,000 total selling the calendar for 2023.

So when doing my 2023 Taxes: Should I put $40 Line 35, $1100 Line 36, and $300 Line 41? Then should I put the supplies to ship the calendars on 38/39 of COGS, line 22 supplies on part 2, or part 5 other expenses?

Thank you!

[PatriciaV]

The inventory section calculates the cost for the items you sold this year.

Per your example:

Line 35: Beginning Inventory (carried over from last year): $40

Line 36: Plus: Purchases, Materials, and Supplies: $1,100

Line 41: Less: Ending Inventory: $300

Line 42: Cost of Goods Sold: $840

Shipping/packaging costs are generally reported separately from the inventory calculation, either Line 22 Supplies or Line 27a Other Expenses. 

For more info, see IRS on Inventory: How To Figure Cost of Goods Sold