Fillable Form 1125-A - Cost Of Goods Sold printable pdf download

1125-A

Cost of Goods Sold

Form

OMB No. 1545-0123

(Rev. October 2016)

Attach to Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B.

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Department of the Treasury

Information about Form 1125-A and its instructions is at

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Internal Revenue Service

Employer identification number

Name

Inventory at beginning of year

Purchases .

Cost of labor

Additional section 263A costs (attach schedule) .

Other costs (attach schedule)

Total. Add lines 1 through 5 .

Inventory at end of year .

Cost of goods sold. Subtract line 7 from line 6. Enter here and on Form 1120, page 1, line 2 or the

appropriate line of your tax return. See instructions .

Check all methods used for valuing closing inventory:

(i)

Cost

(ii)

Lower of cost or market

(iii)

Other (Specify method used and attach explanation.)

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Check if there was a writedown of subnormal goods

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Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970)

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If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed

under LIFO .

If property is produced or acquired for resale, do the rules of section 263A apply to the entity? See instructions .

Yes

Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If “Yes,”

attach explanation

Yes

Section references are to the Internal

Under this accounting method, inventory

ending on or after December 31, 2000, has

Revenue Code unless otherwise noted.

costs for raw materials purchased for use

average annual gross receipts of $10

in producing finished goods and

million or less for the 3 prior tax years, (b)

General Instructions

merchandise purchased for resale are

whose principal business activity is not an

deductible in the year the finished goods or

ineligible activity, and (c) whose business is

Purpose of Form

merchandise are sold (but not before the

not a tax shelter (as defined in section 448

Use Form 1125-A to calculate and deduct

year you paid for the raw materials or

(d)(3)). See Rev. Proc. 2002-28, 2002-18

cost of goods sold for certain entities.

merchandise, if you are also using the cash

I.R.B. 815.

method).

Uniform capitalization rules. The uniform

Who Must File

If you account for inventoriable items in

capitalization rules of section 263A

Filers of Form 1120, 1120-C, 1120-F,

the same manner as materials and supplies

generally require you to capitalize, or

1120S, 1065, or 1065-B, must complete

that are not incidental, you can currently

include in inventory, certain costs incurred

and attach Form 1125-A if the applicable

in connection with the following.

deduct expenditures for direct labor and all

entity reports a deduction for cost of goods

indirect costs that would otherwise be

• The production of real property and

sold.

included in inventory costs. See the

tangible personal property held in inventory

Inventories

instructions for lines 2 and 7.

or held for sale in the ordinary course of

For additional guidance on this method

business.

Generally, inventories are required at the

of accounting, see Pub. 538, Accounting

beginning and end of each tax year if the

• Real property or personal property

Periods and Methods. For guidance on

production, purchase, or sale of

(tangible and intangible) acquired for resale.

adopting or changing to this method of

merchandise is an income-producing

• The production of real property and

accounting, see Form 3115, Application for

factor. See Regulations section 1.471-1. If

tangible personal property by a corporation

Change in Accounting Method, and its

inventories are required, you generally

for use in its trade or business or in an

instructions.

must use an accrual method of accounting

activity engaged in for profit.

for sales and purchases of inventory items.

Qualifying taxpayer. A qualifying

See the discussion on section 263A

taxpayer is a taxpayer that, (a) for each

Exception for certain taxpayers. If you

uniform capitalization rules in the

prior tax year ending after December 16,

are a qualifying taxpayer or a qualifying

instructions for your tax return before

1998, has average annual gross receipts of

small business taxpayer (defined below),

completing Form 1125-A. Also see

$1 million or less for the 3 prior tax years,

you can adopt or change your accounting

Regulations sections 1.263A-1 through

and (b) its business is not a tax shelter (as

method to account for inventoriable items

1.263A-3. See Regulations section

defined in section 448(d)(3)). See Rev.

in the same manner as materials and

1.263A-4 for rules for property produced in

Proc. 2001-10, 2001-2 I.R.B. 272.

supplies that are not incidental.

a farming business.

Qualifying small business taxpayer. A

qualifying small business taxpayer is a

taxpayer that, (a) for each prior tax year

1125-A

For Paperwork Reduction Act Notice, see instructions.

Form

(Rev. 10-2016)

Cat. No. 55988R

Form 1125-A - Cost Of Goods Sold

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