No, you do not have to manually unpack and count the thousands of things in your stockroom and include them in my EOY inventory. Under current tax law you do not have to account for or separately state your cost for what you have 'on hand' as of December 31st. This simply put is your end of year inventory. In the past, the IRS did not want you to reduce your taxable income by the cost of products that were not yet sold on the last day of the tax year. Today, that is not the case, due to the Tax Cuts and Jobs Act (TCJA).
According to TCJA, businesses with gross receipts below $26 million are considered eligible to use the cash method of accounting for their inventory.
- TCJA Comparison for Businesses: The law expands the number of small business taxpayers eligible to use the cash method of accounting and exempts these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts. As a result, more small business taxpayers can change to cash method accounting starting after Dec. 31, 2017.
@OneSmallBlonde
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