Good evening. I am a bit troubled by this response, but perhaps it's my unique situation:
I'm a small seller making less than (1m), Does 'non-incidental materials' mean general business expenses or (exclusively) costs of inventory goods??
Additionally, can I use cash method to deduct inventory if most of my business is buying bundles of books, different bundles have different prices / book count / book value/rarity, value and costs of bundles is not directly reflected in the quantity of books per bundle. So can I simply deduct ALL costs of goods at the moment of purchase (adding up receipts) and report that, which would obviously include UNSOLD inventory costs as part of the 'Costs of goods sold deduction.'
1.) I don't count my inventory because different numbers of books/rarity/price per bundle is an (inaccurate) log of my expenses.
2.) Therefore, I allocate costs of inventory based on receipts, as an accurate representation due to the nature of my business.
So, are you saying this still forces me to use the accrual method (deducting on AFTER inventory sells) simply because I keep a log of expenses balance? If so, how can I even value my inventory, as the IRS describes: 'accurate representation of expenses,' I can literally only do this by adding up the total cost of bundle receipts, as the most 'accurate' way of determining per item cost. If I can't do this for accrual accounting, then am I suppose to guess per item cost? Flip a coin maybe? I guess what I'm asking is:
'Does my unique situation allow me to deduct based on cash recording method (regardless of sold / unsold status), or are we all forced to use an accrual method for inventory cost deduction under any circ*mstances? If I can't determine based on bundle price / my method of cash record keeping / adding up receipts (without) subtracting unsold inventory costs, how can I even do business? Thanks!
