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Originally Posted by pterrier
I am starting a small home-based business that buys and resells merchandise on an extremely small scale. On my startup inventory purchases can I categorize that as expense on part V of schedule C, or do I have to use the inventory section.
My main question is if I spend $3000 starting my business and do not have any profit by the end of the year, can I show a $3000 loss?
Thanks.
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If you don't have much inventory, I'd probably just expense it all as a purchase in the cost of sales section. Otherwise, you'd need to calculate out your purchases if you decide to record inventory.
Cost of sales + beginning inventory - ending inventory = purchases, IIRC.
And if the $3,000 is for legitimate business expenses, probably. Don't forget, there's other costs as well, such as business use of the home and auto milage.