If you make or buy goods to sell, you can deduct the cost of goods sold from your gross receipts on Schedule C. However, to determine these costs, you may need to value your inventory at the beginning and end of each tax year.

This chapter applies to you if you are a manufacturer, wholesaler, or retailer, or if you are engaged in any business that makes, buys, or sells goods to produce income. This chapter does not apply to personal service businesses, such as those of doctors, lawyers, carpenters, and painters. However, if those working in personal service businesses also sell or charge for the materials and supplies that are normally used in their businesses, this chapter applies to them.

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