Yes you can! If your “cost of goods” (i.e. the price of your inventory) exceeds your sales, it’s totally legitimate to report that expense as a write-off and show net income of zero on your Schedule C.If your costs exceed your income, you have what’s called an “operating loss,” which you can carry over and apply to your income next year.
The only caveat is that only 80% of your loss can be applied to future revenue.
No answer given yet!
Sarah is a staff writer at Keeper Tax and has her Enrolled Agent license with the IRS. Her work has been featured in Business Insider, Money Under 30, Best Life, GOBankingRates, and Shopify. She has nearly a decade of public accounting experience, and has worked with clients in a wide range of industries, including oil and gas, manufacturing, real estate, wholesale and retail, finance, and ecommerce. Sarah has extensive experience offering strategic tax planning at the state and federal level. During her time in industry, she handled tax returns for C Corps, S corps, partnerships, nonprofits, and sole proprietorships. Sarah is a member of the National Association of Enrolled Agents (NAEA) and maintains her continuing education requirements by completing over 30 hours of tax training every year. In her spare time, she is a devoted cat mom and enjoys hiking, baking, and overwatering her houseplants.