Can I deduct all of my shipping charges for goods I received before I sell those goods?

[kbcost]

I have a question that I have looked everywhere for, but I can't find the answer anywhere.  Here it is.  Let's say I bought 80 items to resell this year and I end up selling 40 of those items by the end of the year.  My total cost is $100.  Now let's say $7 of that is from tax I paid (not tax exempt yet) and $52 is for shipping.  Should I put my COGS as $1.25 per unit or can I write off all of the shipping costs and taxes I paid this year and put my COGS as $0.5125 per unit?  It seems to me that in the end it's going to work out the same regardless, but that doing it the 2nd way would help me lower my tax burden this year which would be helpful still being in the early stages of my business.

[Anonymous_ · Accepted solution]

Shipping charges from your vendor to your company (freight in) are typically included in your cost of goods sold (COGS).

As a result, those charges are incorporated in COGS and deducted from your gross income as inventory is sold (not before).