Do i enter raw materials in the supply section?

If you purchase raw materials to make a new product:

• If you are not reporting Inventory, you can enter raw materials as supplies.

If you purchase a product and resell it in its original form:

• You'll need to report Beginning Inventory, Purchases and Ending Inventory.  Materials should be reported within the Inventory input.

Are raw materials for a finished product a 100% deductible?

For example: A contractor billed his business customers for raw materials plus labor and tax. He received a 1099 for the total cost of the bill together.

In turbo tax, there is a section to report 1099 income. The question is: Raw materials and tax are not his income. Does he subtract them off the total for 1099 income when he report his income or how would you suggest the best way to do that?