You can keep any inventory and charge the purchases to Cost of Goods sold, or you can include it under supplies.
Line 23
Do not deduct the following.
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Federal income taxes, including your self-employment tax. However, you can deduct one-half of your self-employment tax on Schedule 1 (Form 1040), line 14 (but if filing Form 1040-NR, then only when covered under the U.S. social security system due to an international social security agreement).
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Estate and gift taxes.
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Taxes assessed to pay for improvements, such as paving and sewers.
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Taxes on your home or personal use property.
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State and local sales taxes on property purchased for use in your business. Instead, treat these taxes as part of the cost of the property.
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State and local sales taxes imposed on the buyer that you were required to collect and pay over to state or local governments. These taxes are not included in gross receipts or sales nor are they a deductible expense. However, if the state or local government allowed you to retain any part of the sales tax you collected, you must include that amount as income on line 6.
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Other taxes and license fees not related to your business.
