Business expense - cost of goods sold
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Returning Member

Business expense - cost of goods sold

Quick question, if I buy inventory at the end of the year and is being used in next year, so I show that entire cost of inventory at one time or do I only show cost of goods sold as it's sold.

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Expert Alumni

Business expense - cost of goods sold

Cost of goods sold is counted only when the goods are sold. It is a calculation. COGS = Beginning inventory + Purchases - Ending inventory.

 

Any goods left unsold at the end of the year is counted as Ending inventory (at cost price).

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Returning Member

Business expense - cost of goods sold

Does the ending inventory get reported on the tax form?

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Expert Alumni

Business expense - cost of goods sold

Yes, ending inventory goes on Schedule C line 41.

 

The cost of goods sold calculation is shown on lines 33-42 of Schedule C.  Cost of goods sold is shown on line 4 as well. 

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