Hi everyone. I've been doing a lot of research to prepare myself to fill out Schedule C correctly. I am finding some opposing information, that I need clarified. I make jewelry using raw materials like stones and metals.
Many forums have been stating that if I skip the Cost of Goods Sold section, because I do not keep track of inventory, and instead enter my expenses in Part II Expenses, I can only deduct the raw materials I have already used in my finished or in-progress works. Some sites say that I am allowed to deduct the cost of my total purchase of raw materials, even ones that I have not started to turn into jewelry pieces. I buy my materials in bulk, and do not track when I'm using individual items, like one stone out of a bulk order, or how much of a metal in every piece.
I found this on the IRS website:
"In most cases, you can deduct the cost of materials and supplies only to the extent you actually consumed and used them in your business during the tax year (unless you deducted them in a prior tax year). However, if you had incidental materials and supplies on hand for which you kept no inventories or records of use, you can deduct the cost of those you actually purchased during the tax year, provided that method clearly reflects income."
So if I'm not keeping inventory or records of use of my individual stones and feet of metal, would I be able to deduct the whole cost of the bulk purchase?
Thank you
