I am trying to fill form 8858 for my FDE. I don't understand Schedule H Lines 2 and 3 "additions and subtractions". Instructions say “Inventory adjustments. Inventories must be taken into account according to the rules of sections 471 (incorporating the provisions of section 263A) and 472 and the related regulations.”
So if I bought some inventory to sell during the tax year, but didn’t sell any of it yet, do I have to report the cost of the inventory in 8858 Schedule H?
Is it an addition or a subtraction?
If it’s an addition, Schedule H is counting my unsold inventory as income? Isn’t that going to conflict with my 1040 where I don’t report my inventory as income?
I’m not taking any expense deduction for the inventory because it’s supposed to be reported as part of Cost of Goods Sold in the year when it is sold.
Thanks very much for any help.
