It is inventory. She is purchasing items to resell even if she has to sell them at a reduced price.
Yes. There are two basic types
of businesses in regards to this issue. If you make and/or sell merchandise you
would enter it in COGS as indicated below. If you merely have a service type of
business, you would enter it as an expense.
Per the IRS:
How To Figure Cost of Goods Sold
If you make or buy goods to
sell, you can deduct the cost of goods sold from your gross receipts on
Schedule C. However, to determine these costs, you must value your inventory at
the beginning and end of each tax year.
This chapter applies to you if
you are a manufacturer, wholesaler, or retailer or if you are engaged in any
business that makes, buys, or sells goods to produce income.
Follow the
instructions below to enter "Cost of Goods Sold":
1. Click on the Business tab and then click on the
blue Continue button.
2. That will take
you a screen that asks How do you want to
work on your business income? Select I'll choose what I work on.
3. On the Let's gather your business info screen
you'll see Business Income and Expenses.
Click on either Update or Start, to the right.
4. The next screen
will be Here's the business info we have so
far. If you have been here before you can just select Edit.
5. On the next
screen Inventory/Cost of Goods Sold is
the third one down. Select Update.
Be
sure you entered the beginning and ending inventories. If you do not keep an
inventory, these are probably supplies.
TurboTax Calculates Cost of Goods Sold as
follows:
Beginning
Inventory
+ Purchases
=
Inventory Available For Sale
- Ending Inventory
=
Cost of Goods Sold
