new tax law on inventory

[oceanlovin'ea]

Under the new tax law for accounting methods, it states that taxpayers taht meet the $25 million gross receipts test are not required to account for inventories, but may use a method of accounting for inventories that either: 1) treats inventories as non-incidental materials and supplies or 2) conforms to the taxpayers financial accounting treatment of inventories.

Does this mean that a business that had to account for inventory in the past can now count them as supplies? I have a client who is beginning to carry some beauty products for sale, just a few items. She would be able to just consider them supplies and not have to keep track of inventory??
Even if inventory in the past was several thousand dollars, but the gross receipts from the business are less than $30,000 for the year, the owner would not have to keep inventory on the books???
That would be WONDERFUL!! AMAZING!!
How would you go about moving the items in inventory out of inventory?

Thanks for all help.

Linda F

[terryats]

Sadly no, they can change to cash basis TP, but from IRS

The IRS guidance states that

“not incidental” materials and supplies are deductible in the year they are used or paid

,

whichever is later.

[TaxGuyBill]

I agree with terryats. When you look at the fine print, "non incidental" supplies basically require the same type of record keeping as inventory (you only get the deduction when it is used).

However, I think there is a cool way out of that in most situations. :-)

As you mentioned, that can be treated as not inventory, and are now "non incidental materials and supplies". If you also make the De Minimis Election (assuming the taxpayer qualifies), that election allows you to deduct "all materials and supplies". :-)