Thanks so much for the reply, pk. My biz is just a simple foreign disregarded entity. No partnerships, no corporations, not a CFC, not a QBU. It’s comparable to a sole-proprietorship in the US, but with much more difficult forms to fill. I live in the country where the biz is operating.
I bought these products in the country where I live to package and resell in the same country. I didn't make them myself, I'm just going to market them. I bought them in 2023 and did not sell any of them in 2023. (I'm filing a year 2023 8858--I have an extension).
So I thought the cost of the goods is not deducted until I sell them as COGS. If I had to add the cost to my 8858 Schedule H taxable income (or loss), IRS would assume this was income and it’s not. Unless it's a subtraction, not an addition. I don't know how to classify it.
So I just need clarification about what they mean when they say “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.”
It’s vague wording. “Inventories must be taken into account.” Okay, but should they be reported on Schedule H, in this circumstance?
Thanks again for your help.
