Can i Use cash method on my tax return, and use cost of goods sold (accrual method for inventory only)?

Forum|Forum|2 years ago
February 15, 2024
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RobertB4444

Yes. The only thing that you can't do is switch back and forth every year. Pick a tax method for your accounting and then plan to stick with it.

@ron2024

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ron2024Author

Thank you! That's means, under cash method for tax return, i can use either deduct the full inventory cost when purchase (cash method), or use cost of goods sold (accrual method), right?

RobertB4444

Correct. But once you have made that selection on your tax return you are stuck with the choice. So make sure that you have thought this through.

Also, while you can deduct your full inventory when purchased using the cash method you will still have to enter your beginning and ending inventories accounted for using the cash method. So you get to deduct the total cost of the inventory minus what you haven't sold yet.

@ron2024

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