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2012 1040 Irs Tax Forms

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2012 1040 Irs Tax Forms

2012 1040 irs tax forms 1. 2012 1040 irs tax forms   Importance of Records Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Benefits of Recordkeeping Kinds of Records To Keep How Long To Keep Records Introduction A farmer, like other taxpayers, must keep records to prepare an accurate income tax return and determine the correct amount of tax. 2012 1040 irs tax forms This chapter explains the benefits of keeping records, what kinds of records you must keep, and how long you must keep them for federal tax purposes. 2012 1040 irs tax forms Tax records are not the only type of records you need to keep for your farming business. 2012 1040 irs tax forms You should also keep records that measure your farm's financial performance. 2012 1040 irs tax forms This publication only discusses tax records. 2012 1040 irs tax forms The Farm Financial Standards Council has produced a publication that provides a detailed explanation of the recommendations of the Council for financial reporting and analysis. 2012 1040 irs tax forms For information on recordkeeping, you can purchase and download Financial Guidelines for Agricultural Producers at www. 2012 1040 irs tax forms ffsc. 2012 1040 irs tax forms org. 2012 1040 irs tax forms For more information, contact Countryside Marketing, Inc. 2012 1040 irs tax forms in the following manner. 2012 1040 irs tax forms Call 262-253-6902. 2012 1040 irs tax forms Send a fax to 262-253-6903. 2012 1040 irs tax forms Write to: Farm Financial Standards Council N78 W14573 Appleton Ave. 2012 1040 irs tax forms , #287 Menomonee Falls, WI 53051. 2012 1040 irs tax forms Topics - This chapter discusses: Benefits of recordkeeping Kinds of records to keep How long to keep records Useful Items - You may want to see: Publication 51 (Circular A), Agricultural Employer's Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses See chapter 16 for information about getting publications. 2012 1040 irs tax forms Benefits of Recordkeeping Everyone in business, including farmers, must keep appropriate records. 2012 1040 irs tax forms Recordkeeping will help you do the following. 2012 1040 irs tax forms Monitor the progress of your farming business. 2012 1040 irs tax forms   You need records to monitor the progress of your farming business. 2012 1040 irs tax forms Records can show whether your business is improving, which items are selling, or what changes you need to make. 2012 1040 irs tax forms Records can help you make better decisions that may increase the likelihood of business success. 2012 1040 irs tax forms Prepare your financial statements. 2012 1040 irs tax forms   You need records to prepare accurate financial statements. 2012 1040 irs tax forms These include income (profit and loss) statements and balance sheets. 2012 1040 irs tax forms These statements can help you in dealing with your bank or creditors and help you to manage your farm business. 2012 1040 irs tax forms Identify source of receipts. 2012 1040 irs tax forms   You will receive money or property from many sources. 2012 1040 irs tax forms Your records can identify the source of your receipts. 2012 1040 irs tax forms You need this information to separate farm from nonfarm receipts and taxable from nontaxable income. 2012 1040 irs tax forms Keep track of deductible expenses. 2012 1040 irs tax forms   You may forget expenses when you prepare your tax return unless you record them when they occur. 2012 1040 irs tax forms Prepare your tax returns. 2012 1040 irs tax forms   You need records to prepare your tax return. 2012 1040 irs tax forms For example, your records must support the income, expenses, and credits you report. 2012 1040 irs tax forms Generally, these are the same records you use to monitor your farming business and prepare your financial statements. 2012 1040 irs tax forms Support items reported on tax returns. 2012 1040 irs tax forms   You must keep your business records available at all times for inspection by the IRS. 2012 1040 irs tax forms If the IRS examines any of your tax returns, you may be asked to explain the items reported. 2012 1040 irs tax forms A complete set of records will speed up the examination. 2012 1040 irs tax forms Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. 2012 1040 irs tax forms You can choose any recordkeeping system suited to your farming business that clearly shows, for example, your income and expenses. 2012 1040 irs tax forms You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. 2012 1040 irs tax forms See  chapter 2. 2012 1040 irs tax forms If you are in more than one business, you should keep a complete and separate set of records for each business. 2012 1040 irs tax forms A corporation should keep minutes of board of directors' meetings. 2012 1040 irs tax forms Your recordkeeping system should include a summary of your business transactions. 2012 1040 irs tax forms This summary is ordinarily made in accounting journals and ledgers. 2012 1040 irs tax forms For example, they must show your gross income, as well as your deductions and credits. 2012 1040 irs tax forms In addition, you must keep supporting documents. 2012 1040 irs tax forms Purchases, sales, payroll, and other transactions you have in your business generate supporting documents such as invoices and receipts. 2012 1040 irs tax forms These documents contain the information you need to record in your journals and ledgers. 2012 1040 irs tax forms It is important to keep these documents because they support the entries in your journals and ledgers and on your tax return. 2012 1040 irs tax forms Keep them in an orderly fashion and in a safe place. 2012 1040 irs tax forms For instance, organize them by year and type of income or expense. 2012 1040 irs tax forms Electronic records. 2012 1040 irs tax forms   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. 2012 1040 irs tax forms When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. 2012 1040 irs tax forms An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. 2012 1040 irs tax forms The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. 2012 1040 irs tax forms All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. 2012 1040 irs tax forms Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. 2012 1040 irs tax forms The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. 2012 1040 irs tax forms You still have the responsibility of retaining any other books and records that are required to be retained. 2012 1040 irs tax forms The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. 2012 1040 irs tax forms This test is not considered an examination and the results must be shared with you. 2012 1040 irs tax forms If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. 2012 1040 irs tax forms If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copybooks and records in a manner that allows you and the IRS to determine your correct tax. 2012 1040 irs tax forms For details on electronic storage system requirements, see Rev. 2012 1040 irs tax forms Proc. 2012 1040 irs tax forms 97-22. 2012 1040 irs tax forms You can find Rev. 2012 1040 irs tax forms Proc. 2012 1040 irs tax forms 97-22 on page 9 of Internal Revenue Bulletin 1997-13 at  www. 2012 1040 irs tax forms irs. 2012 1040 irs tax forms gov/pub/irs-irbs/irb97-13. 2012 1040 irs tax forms pdf. 2012 1040 irs tax forms Travel, transportation, entertainment, and gift expenses. 2012 1040 irs tax forms   Specific recordkeeping rules apply to these expenses. 2012 1040 irs tax forms For more information, see Publication 463. 2012 1040 irs tax forms Employment taxes. 2012 1040 irs tax forms   There are specific employment tax records you must keep. 2012 1040 irs tax forms For a list, see Publication 51 (Circular A). 2012 1040 irs tax forms Excise taxes. 2012 1040 irs tax forms   See How To Claim a Credit or Refund in chapter 14 for the specific records you must keep to verify your claim for credit or refund of excise taxes on certain fuels. 2012 1040 irs tax forms Assets. 2012 1040 irs tax forms   Assets are the property, such as machinery and equipment, you own and use in your business. 2012 1040 irs tax forms You must keep records to verify certain information about your business assets. 2012 1040 irs tax forms You need records to figure your annual depreciation deduction and the gain or (loss) when you sell the assets. 2012 1040 irs tax forms Your records should show all the following. 2012 1040 irs tax forms When and how you acquired the asset. 2012 1040 irs tax forms Purchase price. 2012 1040 irs tax forms Cost of any improvements. 2012 1040 irs tax forms Section 179 deduction taken. 2012 1040 irs tax forms Deductions taken for depreciation. 2012 1040 irs tax forms Deductions taken for casualty losses, such as losses resulting from fires or storms. 2012 1040 irs tax forms How you used the asset. 2012 1040 irs tax forms When and how you disposed of the asset. 2012 1040 irs tax forms Selling price. 2012 1040 irs tax forms Expenses of sale. 2012 1040 irs tax forms   The following are examples of records that may show this information. 2012 1040 irs tax forms Purchase and sales invoices. 2012 1040 irs tax forms Real estate closing statements. 2012 1040 irs tax forms Canceled checks. 2012 1040 irs tax forms Bank statements. 2012 1040 irs tax forms Financial account statements as proof of payment. 2012 1040 irs tax forms   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. 2012 1040 irs tax forms These include account statements prepared for the financial institution by a third party. 2012 1040 irs tax forms These account statements must be legible. 2012 1040 irs tax forms The following table lists acceptable account statements. 2012 1040 irs tax forms IF payment is by. 2012 1040 irs tax forms . 2012 1040 irs tax forms . 2012 1040 irs tax forms THEN the statement must show the. 2012 1040 irs tax forms . 2012 1040 irs tax forms . 2012 1040 irs tax forms Check Check number. 2012 1040 irs tax forms Amount. 2012 1040 irs tax forms Payee's name. 2012 1040 irs tax forms Date the check amount was posted to the account by the financial institution. 2012 1040 irs tax forms Electronic funds  transfer Amount transferred. 2012 1040 irs tax forms Payee's name. 2012 1040 irs tax forms Date the transfer was posted to the account by the financial institution. 2012 1040 irs tax forms Credit card Amount charged. 2012 1040 irs tax forms Payee's name. 2012 1040 irs tax forms Transaction date. 2012 1040 irs tax forms    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. 2012 1040 irs tax forms You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. 2012 1040 irs tax forms Tax returns. 2012 1040 irs tax forms   Keep copies of your filed tax returns. 2012 1040 irs tax forms They help in preparing future tax returns and making computations if you file an amended return. 2012 1040 irs tax forms Keep copies of your information returns such as Form 1099, Schedule K-1, and Form W-2. 2012 1040 irs tax forms How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. 2012 1040 irs tax forms Keep records that support an item of income or a deduction appearing on a return until the period of limitations for the return runs out. 2012 1040 irs tax forms A period of limitations is the period of time after which no legal action can be brought. 2012 1040 irs tax forms Generally, that means you must keep your records for at least 3 years from when your tax return was due or filed or within 2 years of the date the tax was paid, whichever is later. 2012 1040 irs tax forms However, certain records must be kept for a longer period of time, as discussed below. 2012 1040 irs tax forms Employment taxes. 2012 1040 irs tax forms   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. 2012 1040 irs tax forms Assets. 2012 1040 irs tax forms   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. 2012 1040 irs tax forms You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure your basis for computing gain or (loss) when you sell or otherwise dispose of the property. 2012 1040 irs tax forms   You may need to keep records relating to the basis of property longer than the period of limitation. 2012 1040 irs tax forms Keep those records as long as they are important in figuring the basis of the original or replacement property. 2012 1040 irs tax forms Generally, this means as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. 2012 1040 irs tax forms For example, if you received property in a nontaxable exchange, you must keep the records for the old property, as well as for the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. 2012 1040 irs tax forms For more information on basis, see chapter 6. 2012 1040 irs tax forms Records for nontax purposes. 2012 1040 irs tax forms   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. 2012 1040 irs tax forms For example, your insurance company or creditors may require you to keep them longer than the IRS does. 2012 1040 irs tax forms Prev  Up  Next   Home   More Online 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Affordable Care Act Tax Provisions for Employers

The Affordable Care Act, or health care law, contains benefits and responsibilities for employers. The size and structure of your workforce – small, large, or part of a group – helps determine what applies to you. However, if you have no employees, the following information does not apply to you.

 Small Employers
 
Large Employers
 
Small employers, generally those with fewer than 50 full-time employees, may be eligible for credits and other benefits.
 
  > More…
 
A large employer has 50 or more full-time employees or equivalents.
 
  > More…

 

How do I know if I am a small or large employer? Why does it matter?

An employer’s size is determined by the number of its employees. Employer benefits, opportunities and requirements are dependent upon the employer’s size and the applicable rules. Generally, an employer with 50 or more full-time employees or equivalents will be considered a large employer.

Employers with:

  • Fewer than 25 full-time equivalent employees may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing coverage.
  • Generally 50 or fewer employees may be eligible to buy coverage through the Small Business Health Options Program (SHOP). Learn more at HealthCare.gov
  • 50 or more full-time equivalent employees will need to file an annual return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions.

Certain affiliated employers with common ownership or part of a controlled group must aggregate their employees to determine their workforce size. Proposed regulations (pdf) and FAQs provide more information about determining the size of your workforce.

Page Last Reviewed or Updated: 28-Jan-2014

The 2012 1040 Irs Tax Forms

2012 1040 irs tax forms 6. 2012 1040 irs tax forms   How To Figure Cost of Goods Sold Table of Contents Introduction Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42Line 35 Inventory at Beginning of Year Line 36 Purchases Less Cost of Items Withdrawn for Personal Use Line 37 Cost of Labor Line 38 Materials and Supplies Line 39 Other Costs Line 40 Add Lines 35 through 39 Line 41 Inventory at End of Year Line 42 Cost of Goods Sold Introduction If you make or buy goods to sell, you can deduct the cost of goods sold from your gross receipts on Schedule C. 2012 1040 irs tax forms However, to determine these costs, you must value your inventory at the beginning and end of each tax year. 2012 1040 irs tax forms 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. 2012 1040 irs tax forms This chapter does not apply to a personal service business, such as the business of a doctor, lawyer, carpenter, or painter. 2012 1040 irs tax forms However, if you work in a personal service business and also sell or charge for the materials and supplies normally used in your business, this chapter applies to you. 2012 1040 irs tax forms If you must account for an inventory in your business, you must generally use an accrual method of accounting for your purchases and sales. 2012 1040 irs tax forms For more information, see chapter 2. 2012 1040 irs tax forms Figuring Cost of Goods Sold on Schedule C, Lines 35 Through 42 Figure your cost of goods sold by filling out lines 35 through 42 of Schedule C. 2012 1040 irs tax forms These lines are reproduced below and are explained in the discussion that follows. 2012 1040 irs tax forms 35 Inventory at beginning of year. 2012 1040 irs tax forms If different from last year's closing inventory, attach explanation   36 Purchases less cost of items withdrawn for personal use   37 Cost of labor. 2012 1040 irs tax forms Do not include any amounts paid to yourself   38 Materials and supplies   39 Other costs   40 Add lines 35 through 39   41 Inventory at end of year   42 Cost of goods sold. 2012 1040 irs tax forms Subtract line 41 from line 40. 2012 1040 irs tax forms  Enter the result here and on line 4   Line 35 Inventory at Beginning of Year If you are a merchant, beginning inventory is the cost of merchandise on hand at the beginning of the year that you will sell to customers. 2012 1040 irs tax forms If you are a manufacturer or producer, it includes the total cost of raw materials, work in process, finished goods, and materials and supplies used in manufacturing the goods (see Inventories in chapter 2). 2012 1040 irs tax forms Opening inventory usually will be identical to the closing inventory of the year before. 2012 1040 irs tax forms You must explain any difference in a schedule attached to your return. 2012 1040 irs tax forms Donation of inventory. 2012 1040 irs tax forms   If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. 2012 1040 irs tax forms The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. 2012 1040 irs tax forms You must remove the amount of your contribution deduction from your opening inventory. 2012 1040 irs tax forms It is not part of the cost of goods sold. 2012 1040 irs tax forms   If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. 2012 1040 irs tax forms Treat the inventory's cost as you would ordinarily treat it under your method of accounting. 2012 1040 irs tax forms For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. 2012 1040 irs tax forms   A special rule may apply to certain donations of food inventory. 2012 1040 irs tax forms See Publication 526, Charitable Contributions. 2012 1040 irs tax forms Example 1. 2012 1040 irs tax forms You are a calendar year taxpayer who uses an accrual method of accounting. 2012 1040 irs tax forms In 2013, you contributed property from inventory to a church. 2012 1040 irs tax forms It had a fair market value of $600. 2012 1040 irs tax forms The closing inventory at the end of 2012 properly included $400 of costs due to the acquisition of the property, and in 2012, you properly deducted $50 of administrative and other expenses attributable to the property as business expenses. 2012 1040 irs tax forms The charitable contribution allowed for 2013 is $400 ($600 − $200). 2012 1040 irs tax forms The $200 is the amount that would be ordinary income if you had sold the contributed inventory at fair market value on the date of the gift. 2012 1040 irs tax forms The cost of goods sold you use in determining gross income for 2013 must not include the $400. 2012 1040 irs tax forms You remove that amount from opening inventory for 2013. 2012 1040 irs tax forms Example 2. 2012 1040 irs tax forms If, in Example 1, you acquired the contributed property in 2013 at a cost of $400, you would include the $400 cost of the property in figuring the cost of goods sold for 2013 and deduct the $50 of administrative and other expenses attributable to the property for that year. 2012 1040 irs tax forms You would not be allowed any charitable contribution deduction for the contributed property. 2012 1040 irs tax forms Line 36 Purchases Less Cost of Items Withdrawn for Personal Use If you are a merchant, use the cost of all merchandise you bought for sale. 2012 1040 irs tax forms If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into a finished product. 2012 1040 irs tax forms Trade discounts. 2012 1040 irs tax forms   The differences between the stated prices of articles and the actual prices you pay for them are called trade discounts. 2012 1040 irs tax forms You must use the prices you pay (not the stated prices) in figuring your cost of purchases. 2012 1040 irs tax forms Do not show the discount amount separately as an item in gross income. 2012 1040 irs tax forms   An automobile dealer must record the cost of a car in inventory reduced by any manufacturer's rebate that represents a trade discount. 2012 1040 irs tax forms Cash discounts. 2012 1040 irs tax forms   Cash discounts are amounts your suppliers let you deduct from your purchase invoices for prompt payments. 2012 1040 irs tax forms There are two methods of accounting for cash discounts. 2012 1040 irs tax forms You can either credit them to a separate discount account or deduct them from total purchases for the year. 2012 1040 irs tax forms Whichever method you use, you must be consistent. 2012 1040 irs tax forms If you want to change your method of figuring inventory cost, you must file Form 3115, Application for Change in Accounting Method. 2012 1040 irs tax forms For more information, see Change in Accounting Method in chapter 2. 2012 1040 irs tax forms   If you credit cash discounts to a separate account, you must include this credit balance in your business income at the end of the tax year. 2012 1040 irs tax forms If you use this method, do not reduce your cost of goods sold by the cash discounts. 2012 1040 irs tax forms Purchase returns and allowances. 2012 1040 irs tax forms   You must deduct all returns and allowances from your total purchases during the year. 2012 1040 irs tax forms Merchandise withdrawn from sale. 2012 1040 irs tax forms   If you withdraw merchandise for your personal or family use, you must exclude this cost from the total amount of merchandise you bought for sale. 2012 1040 irs tax forms Do this by crediting the purchases or sales account with the cost of merchandise you withdraw for personal use. 2012 1040 irs tax forms You must also charge the amount to your drawing account. 2012 1040 irs tax forms   A drawing account is a separate account you should keep to record the business income you withdraw to pay for personal and family expenses. 2012 1040 irs tax forms As stated above, you also use it to record withdrawals of merchandise for personal or family use. 2012 1040 irs tax forms This account is also known as a “withdrawals account” or “personal account. 2012 1040 irs tax forms ” Line 37 Cost of Labor Labor costs are usually an element of cost of goods sold only in a manufacturing or mining business. 2012 1040 irs tax forms Small merchandisers (wholesalers, retailers, etc. 2012 1040 irs tax forms ) usually do not have labor costs that can properly be charged to cost of goods sold. 2012 1040 irs tax forms In a manufacturing business, labor costs properly allocable to the cost of goods sold include both the direct and indirect labor used in fabricating the raw material into a finished, saleable product. 2012 1040 irs tax forms Direct labor. 2012 1040 irs tax forms   Direct labor costs are the wages you pay to those employees who spend all their time working directly on the product being manufactured. 2012 1040 irs tax forms They also include a part of the wages you pay to employees who work directly on the product part time if you can determine that part of their wages. 2012 1040 irs tax forms Indirect labor. 2012 1040 irs tax forms   Indirect labor costs are the wages you pay to employees who perform a general factory function that does not have any immediate or direct connection with making the saleable product, but that is a necessary part of the manufacturing process. 2012 1040 irs tax forms Other labor. 2012 1040 irs tax forms   Other labor costs not properly chargeable to the cost of goods sold can be deducted as selling or administrative expenses. 2012 1040 irs tax forms Generally, the only kinds of labor costs properly chargeable to your cost of goods sold are the direct or indirect labor costs and certain other costs treated as overhead expenses properly charged to the manufacturing process, as discussed later under Line 39 Other Costs. 2012 1040 irs tax forms Line 38 Materials and Supplies Materials and supplies, such as hardware and chemicals, used in manufacturing goods are charged to cost of goods sold. 2012 1040 irs tax forms Those that are not used in the manufacturing process are treated as deferred charges. 2012 1040 irs tax forms You deduct them as a business expense when you use them. 2012 1040 irs tax forms Business expenses are discussed in chapter 8. 2012 1040 irs tax forms Line 39 Other Costs Examples of other costs incurred in a manufacturing or mining process that you charge to your cost of goods sold are as follows. 2012 1040 irs tax forms Containers. 2012 1040 irs tax forms   Containers and packages that are an integral part of the product manufactured are a part of your cost of goods sold. 2012 1040 irs tax forms If they are not an integral part of the manufactured product, their costs are shipping or selling expenses. 2012 1040 irs tax forms Freight-in. 2012 1040 irs tax forms   Freight-in, express-in, and cartage-in on raw materials, supplies you use in production, and merchandise you purchase for sale are all part of cost of goods sold. 2012 1040 irs tax forms Overhead expenses. 2012 1040 irs tax forms   Overhead expenses include expenses such as rent, heat, light, power, insurance, depreciation, taxes, maintenance, labor, and supervision. 2012 1040 irs tax forms The overhead expenses you have as direct and necessary expenses of the manufacturing operation are included in your cost of goods sold. 2012 1040 irs tax forms Line 40 Add Lines 35 through 39 The total of lines 35 through 39 equals the cost of the goods available for sale during the year. 2012 1040 irs tax forms Line 41 Inventory at End of Year Subtract the value of your closing inventory (including, as appropriate, the allocable parts of the cost of raw materials and supplies, direct labor, and overhead expenses) from line 40. 2012 1040 irs tax forms Inventory at the end of the year is also known as closing or ending inventory. 2012 1040 irs tax forms Your ending inventory will usually become the beginning inventory of your next tax year. 2012 1040 irs tax forms Line 42 Cost of Goods Sold When you subtract your closing inventory (inventory at the end of the year) from the cost of goods available for sale, the remainder is your cost of goods sold during the tax year. 2012 1040 irs tax forms Prev  Up  Next   Home   More Online Publications