Yes, we can give you the bottom line. And you will do the right thing by entering all of the income from the sale of your trinkets and entering all the expenses paid for trinkets in 2024 even if there are some that remain unsold. The explanations below should help with understanding.
Prior to 2018, when you had a product for resale (not a service business) then the IRS wanted you to track your inventory, or products unsold as of December 31st each year. This was your ending inventory for the tax year and it was not allowed to be used against income/sales for a tax year because they were still sitting on the shelf. This was considered as accrual method for the inventory only. Income has always been on the cash method for individuals.
Today we have the Tax Cuts and Jobs Act (TCJA): No ending inventory required if you choose the cash method. Include all of your income and deduct all of the cost for products. See the summary below.
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.
This could change in the future however as of now this is still the tax law.
@OneSmallBlonde
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