Hi friendly tax experts. I have a new farm small business - I just completed my first sale recently and will owe ~$6000 in sales tax to my county. I called the cdtfa, expecting that I'd make the sales tax payment immediately, but they informed me that I should file and pay my sales taxes in July 2023 (my fiscal year for sales tax runs from 1-Jul-2022 to 30-Jun-2023).
I am filing Schedule F using the cash method. In this case, since I was told to pay sales tax in 2023, would I report my $6000 expense as 1b "Cost or other basis of purchased livestock" in 2023, not 2022? The part that's weird to me is that if I have a year with no sales income (very possible with my business), I might still report cost basis from paying the sales tax for sales in the prior year. Would that cause any eyebrow raises from the IRS?
Also, just to throw another variable in the mix, I believe I can make sales tax prepayments this year instead of waiting until Jul 2023. Would this option be recommended to avoid having no sales but still cost basis next year?
