You can include taxes paid in your costs for the merchandise you hold for resale. However, if you are reselling goods, you would generally receive a sales tax exemption from your state taxing authority.
With respect to the cost you pay for merchandise, you would use your actual cost for purchases and then you could use the lower of cost or market value for your ending inventory.
Getting a "smoking deal" on items for resale will serve to increase your gross profit.
