If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in figuring the cost of goods sold. Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.
The following are types of expenses that go into figuring the cost of goods sold.
The cost of products or raw materials, including freight
Storage
Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products
Factory overhead
Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.
MOORE'S SERVICE, LLC
2160 Green Springs Hwy, S. Suite E.
Brimingham, AL 35205
&
708 8TH Ave. N. (Rev. Abraham Woods Blvd.)
Phone: (205) 324-8753
Email: mooresservices1@gmail.com
Website: www.mooresservicesonline.com
Blog: www.mooresservices.blogspot.com
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