I had a CPA until 2019, but began using TT for 2021 tax year.
My overall accounting method is correct on schedule C as “Cash”. My issue is with the Inventory method. I incorrectly did the following in the 2021 tax year:
- In line 33 (method used to value inventory), I used “Cost”, where I should have not used this line)
- In line 35 (inventory beginning of year) I entered an amount $22, where should not have as my previous years. Basically, the only line I should have used is line 36, which I did too.
I noticed the above while working on my 2022 taxes as TT is flagging that “unless I get prior approval from the IRS (form 3115) , I must continue using the same inventory method from year to year” I don’t have a 3115, and prefer to have my inventory method to be cash (vs. the cost)
The bottom line: I want to be able to use the inventory method (cash) for my 2022 taxes as they were on 2019 and prior years. I read quite a bit on the 3115 (instructions, google etc) and still confuse. II would like not to use lines 33 and 35 at all, as it was wrong for me to use them in the first place for the 2021 tax year.
I come up with what I should do, but is there any other options?
- Do I file a 3115 for the 2021 tax year to correct from “cost to cash”, and in turn, continue working and filing my 2022 taxes with my “correct” inventory method (cash)?
- Do I file a 3115 for 2021, continue working on my 2022 taxes using the wrong inventory method, and in turn, do another 3115 after I file them?
- ?
