DIY Products

DIY Products

Whether you’re an experienced do-it-yourselfer or doing your own taxes for the first time, this is your place to learn and share. Here you’ll find information and resources for using H&R Block’s online and software DIY solutions. You’ll also find links to more information to assist you on your DIY journey.

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Trusted Pioneer
Posts: 5
Registered: ‎02-12-2018

Year end inventory

[ Edited ]

I started a new online business in 2017. I am confused with YEAR END INVENTORY. How is this calculated?

 

1- Is it whatever goods I did not sell that I bought during the year? 

So if I bought $50 worth of inventory in December and still had it, would I write that value ($50) for ending inventory? OR is it my total cost of inventory for entire year?

 

2- For line 36 of Sch C, would this be the TOTAL cost of inventory goods for entire year: https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

 

Associate (Pioneer)
Posts: 64
Registered: ‎02-02-2018

Re: Year end inventory

Hi Vtec!

Welcome to H&R Block community.

 

Your year-end inventory would be whatever inventory you still had unsold on the last day of 2017. If you still had $50 worth of inventory, that would be your year-end inventory. That number helps the program do the calculation for this form: https://www.irs.gov/pub/irs-pdf/f1125a.pdf

 

Line 36 of the Schedule C has you reduce your costs of goods sold (COGS) by whatever inventory you used for personal use. Example: If you owned a restaurant and cooked yourself lunch each day at the restaurant without paying the menu price, you would need to back out the costs of those food items from your COGS calculation. If you never used any goods for personal use the line would be the same as total purchases.

 

Braden,

Tax Research Specialist (San Diego)