Here is how you treat inventory.
If you purchase $6,000 worth of t-shirts in 2019, sell $200 worth for $300, you have made a profit of $100 before other expenses.
You will have $5,800 inventory to begin 2020 with. Then If you sell $1000 worth in 2020 for $1,500, you have made a profit of $500 in 2020 before other expenses. Your inventory will be $4,800 in the beginning of 2021.
You can't deduct the cost of inventory until you sell it.
If you sell off all of your $5,800 worth of inventory in 2020 for $1,000, you have a loss of $4,800 before other expenses.
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