@MaryEllen-Your answer is opposite of that posted by TurboTaxfredL. He says if you meet certain rules (business is under $10,000,000 in sales or Personal is under $1,000,000, plus a couple of other restrictions), you can expense the purchased inventory. That would have the effect of reducing current profit in the the items were purchased and increasing the profit in the year the items are sold. For you example, it would appear to allow you to use $600 as the COGS.
It doesn't sound like the IRS to allow you to defer profit, but the "Cost of Goods Sold" section of the Schedule C Instructions refer you to Pub. 538 along with other bulletins appear to me to agree with Fred. However, I would not be surprised if you were both correct because the businesses might be different.
Your comments?
