This was posted by Turbo Tax just about a month ago:
Large businesses that purchase, produce, and sell merchandise to generate income usually keep inventory and use the accrual method of accounting. The inventory's value at year-end is subtracted from its value at the start of the year (plus purchases made during the year) to arrive at the cost of goods sold (COGS) for that year.
However, if your business' annual gross receipts for the last three tax years average out to $26 million or less per year, you can opt to use the cash method and expense the cost of inventory at the time it was purchased, rather than waiting until after it's been sold.
In TurboTax, you can report these costs in the inventory section as COGS or in the expenses section as supplies. Either way, you don't have to report inventory but you do need to carefully track what you paid for the products, materials, and supplies that go into your inventory.
https://ttlc.intuit.com/community/tax-topics/help/do-i-need-to-report-inventory/00/1700549
Based on that, I would say reporting BOY and EOY inventory is not required for companies with 3-year averages of less than $26 million. Only COGS for sold inventory is required to be reported.
If I report BOY and EOY inventory this year, AND didn't sell any of that inventory, then my taxable income increases. Which is infuriating that IRS is taxes us on purchased inventory.
I am looking for answers on this too, please correct me if I am wrong.
