Can my client deduct inventory/COGS paid for in 2019 if her business did not open until 2020? She wants to elect cash basis accounting and not track inventory.

[sarah4]

She already operated a jewelry business as a sole proprietor, and is opening a separate jewelry business for which she spent $30K on inventory in 2019, but did not start selling until 2020. The businesses will have different trade names. Neither is an LLC but I would put both of them under the same business activity code. If we file both businesses under the same schedule C, can we deduct these costs in 2019?

[IRonMaN]

As one of my favorite Stones songs says - you can't always get what you want.

You can only deduct when the business is open and when the inventory is sold.

[sarah4]

@IRonMaN that’s what I was thinking. What I am hung up on is how to file for 2020 under cash basis if we also have 2019 purchases in there. 

[IRonMaN · Accepted solution]

The 2019 purchases are simply 2020 beginning inventory.