Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Deducting Inventory

Birmingham
Level 3

I understand if you deduct all inventory when paid, that you must report it the same way on your financial statements. What about if you just choose  the option to deduct the non-incidental materials and supplies once they are consumed into the final product....could you still included those deducted amounts on your financial statements as inventory?

0 Cheers

This discussion has been locked. New comments cannot be posted on this discussion anymore. Start a new discussion

1 Best Answer

Accepted Solutions
IntuitJim
Employee
Employee

Possibly- it is an either / or, not a both requirement for small taxpayers. According to Publication 334 (2018), Tax Guide for Small Business, if you are a small business taxpayer (average annual gross receipts of $25 million or less for the 3 prior tax years), you can choose not to keep an inventory, IF your method of accounting for inventory treats inventory as non-incidental material or supplies, OR conforms to your financial accounting treatment of inventories.

For more detail, see: https://www.irs.gov/publications/p334#en_US_2018_publink1000313270

View solution in original post

0 Cheers
1 Comment 1
IntuitJim
Employee
Employee

Possibly- it is an either / or, not a both requirement for small taxpayers. According to Publication 334 (2018), Tax Guide for Small Business, if you are a small business taxpayer (average annual gross receipts of $25 million or less for the 3 prior tax years), you can choose not to keep an inventory, IF your method of accounting for inventory treats inventory as non-incidental material or supplies, OR conforms to your financial accounting treatment of inventories.

For more detail, see: https://www.irs.gov/publications/p334#en_US_2018_publink1000313270

0 Cheers