Inventory

Both home businesses can become one by combining the businesses using one Schedule C. Details below may be helpful to make the transition.

1. Move any assets from one Schedule C to the other, if applicable. For the business you no longer use, indicate that each asset was removed for personal use (not sold).  The date converted can be 01/01/2024. Make sure to use the original date placed in service when entering them in the business you will continue to operate which will create the correct accumulated depreciation for each asset (prior years and current year).
2. Inventory of purchases can be combined to enter them on one business.  The other business does not need any entry for purchases.  
3. Keep in mind that as of the Tax Cuts and Jobs Act (TCJA) inventory as of 12/31 for any year does not have to be entered, instead it can be materials or supplies with zero ending inventory.  
   • According to TCJA, businesses with gross receipts below $26 million are considered eligible to use the cash method of accounting for their inventory.  TCJA Comparison for Businesses: The law expands the number of small business taxpayers eligible to use the cash method of accounting and exempts these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts. As a result, more small business taxpayers can change to cash method accounting starting after Dec. 31, 2017.