Which state taxes are you referring to? State income tax or sales tax? The quote above is from IRS Instructions for Schedule C.
You do not have to keep an inventory, I just suggested it was one way to go. You can record it as supplies. If you paid sales tax on the purchase, include it in cost.
Line 23
You can deduct the following taxes and licenses on this line.
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State and local sales taxes imposed on you as the seller of goods or services. If you collected this tax from the buyer, you also must include the amount collected in gross receipts or sales on line 1.
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Real estate and personal property taxes on business assets.
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Licenses and regulatory fees for your trade or business paid each year to state or local governments. But some licenses, such as liquor licenses, may have to be amortized. See chapter 8 of Pub. 535 for details.
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Social security and Medicare taxes paid to match required withholding from your employees’ wages. Reduce your deduction by the amount shown on Form 8846, line 4.
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Federal unemployment tax paid.
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Federal highway use tax.
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Contributions to state unemployment insurance fund or disability benefit fund if they are considered taxes under state law.
