qbteachmt
Level 15

"Do I add $5,000 to the top line on sch C?"

This $5k is not additional but is informational and would already be part of the financial data from the business operation.

What this means is that there are Purchases for that amount, for your taxpayer's business to sell. That is not Revenue, but Expenditure, typically as inventory cost. Your client has to report to the best of her ability her entire business operation. Whether these items are also sold or not will be reflected in the data you get, which also means you ask for starting and ending inventory information as well as purchase amounts.

If none of that is already sold, it is inventory asset. Not income and not expense.

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