Tax Questions for Sellers (Schedule C)

[egbeachley]

Reseller, hobbyist, something like that. But he's not in the business of running electronic auctions.

For #6, to the specific question of whether items purchased in 2010 should go to COGS, even if put to inventory, the answer is No.

I imagine that backing out the COGS of inventory items will put the small loss into a gain.

[ValKehl]

Re item #6, Gary's question is, as I understand it, are ALL purchases for 2010 reported on Line 36, and the correct answer IMHO is YES. Then, those purchases that Gary did NOT sell in 2010 are reported as year-end inventory on Line 41, which is then subtracted from Line 40 to arrive at the cost of goods sold for 2010.
Val

[egbeachley]

Got it. The form calls it COGS but it really is purchases that gets you to COGS later. Only the IRS could do it that way.

[ValKehl]

It's not "only the IRS." As I think anyone who has taken Accounting 101 will attest, the basic CGS formula for a wholesaler or retailer is: Beginning inventory plus purchases minus ending inventory = CGS. For a manufacturer, the basic concept is the same, but the application is more complex.
Val

[glchen]

Thanks, all. Appreciate the responses here.

[alanu]

I actually understand all this accounting talk... and I collect sportscards, could I be a bigger nerd?