I appreciate the responses. It's interesting that the two responses are contradicting each other. I understand the reasoning behind tracking inventory - the reason I ask is that the person I am assisting simply did not track her inventory (we are working on 2016 tax year) so it is pretty difficult to figure out. I was curious if per IRS code it would make sense to deduct as an expense for the first year of the business (2016) and then for 2017 (she is now tracking it as of mid-year so will have accurate year end inventory for 2017) do it 'correctly' by calculating COGS. That presents a problem however because it would assume her 2017 BOY inventory was zero, which is not accurate. I believe I read somewhere that it was okay to do a reasonable estimate of the inventory, which may be the best course of action.
