topic I opt to no longer value my small business inventory; is this considered using "different methods to value my inventory"? Then $0 or amt from prior yr end for my begin #? in Get your taxes done using TurboTax

I opt to no longer value my small business inventory; is this considered using "different methods to value my inventory"? Then $0 or amt from prior yr end for my begin #?

joemamapro — Tue, 03 Feb 2026 06:09:24 GMT

My prior year ending was $16,440, and I valued my inventory last year. Do I still use that for my beginning number this year, and then put $0 for my ending number? Or $0 for both, since I'm no longer valuing inventory?

Re: I opt to no longer value my small business inventory; is this considered using "different methods to value my inventory"? Then $0 or amt from prior yr end for my begin #?

Mike9241 — Sun, 19 Jan 2025 02:38:12 GMT

you want to change your accounting method.

the IRS final regulations may not allow you to change

The final regulations clarify the inventory rules for small businesses. IRC Section 471(c) allows taxpayers meeting the gross receipts test to treat inventories as nonincidental materials and supplies (Section 471(c) NIMS). The final regulations require the capitalization of all direct material costs for property produced or acquired for resale, but they do not include the provision under the proposed regulations that would require small businesses to also capitalize their direct labor costs.

if you were capitalizing labor costs and want to expense them you would have to apply for a change in accounting method. The form is 3115. You will likely need the services of a pro to prepare the form and handle the accounting on your tax return.

Re: I opt to no longer value my small business inventory; is this considered using "different methods to value my inventory"? Then $0 or amt from prior yr end for my begin #?

joemamapro — Sun, 19 Jan 2025 04:45:06 GMT

No labor costs. My business is incredibly small. So this all feels rather complex and over the top.