Woodworking and taxes

[Lee DeRaud]

For you guys that make enough money at this to file a Schedule C:

How do you handle "consumables" like wood, sandpaper, glue, and finishing supplies? Do you just expense whatever you buy each year or do you have to treat it as inventory?

(My apologies for posting this in multiple forums, but I suspect I'm going to get different answers depending on the type of work being done.)

[Paul Heely]

For consumables I will be expensing them for the year. Inventory that is sold goes toward cost of goods sold this year. The distinction I was told for consumables vs inventory was that inventory can be attributed to a specific sale, i.e. an individual pen kit or blank, but consumables cannot, i.e. finish and paper towels.

[Lee DeRaud]

For consumables I will be expensing them for the year. Inventory that is sold goes toward cost of goods sold this year. The distinction I was told for consumables vs inventory was that inventory can be attributed to a specific sale, i.e. an individual pen kit or blank, but consumables cannot, i.e. finish and paper towels.That's kind of where I'm hung up. It's ok to talk about things like pen kits and bowl blanks being attributed to a specific sale, but that only works for "discrete" material purchases. In the same situation, a pen turner who buys a long piece of 12/4 stock and cuts his own blanks probably will have a bunch of raw stock left over at the end of the year...how is that handled?