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.

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IRonMaNAnswer

Level 15

@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.

The 2019 purchases are simply 2020 beginning inventory.

Slava Ukraini!

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sarah4Author

Level 2

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?