Form 1125-A Cost of Goods Sold Rev. November 2018 OMB No. 1545-0123 Attach to Form 1120 1120-C 1120-F 1120S or 1065. To capitalize costs under section 263A. General Instructions Purpose of Form Use Form 1125-A to calculate and deduct cost of goods sold for certain entities. Who Must File Filers of Form 1120 1120-C 1120-F 1120S or 1065 must complete and attach Form 1125-A if the applicable entity reports a deduction for cost of goods sold. Above is not required to capitalize costs under section 263A. See section 263A i. See the discussion on section 263A instructions for your tax return before completing Form 1125-A. Form 1125-A Rev. 11-2018 Specific Instructions Line 1. Inventory at Beginning of Year If you are changing your method of must refigure last year s closing inventory using the new method of accounting. Go to www*irs*gov/Form1125A for the latest information* Department of the Treasury Internal Revenue Service Name Employer identification number 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. appropriate line of your tax return* See instructions. Check all methods used for valuing closing inventory i Cost 9a b Lower of cost or market ii Other Specify method used and attach explanation* iii Check if there was a writedown of subnormal goods. c Check if the LIFO inventory method was adopted this tax year for any goods if checked attach Form 970 d If the LIFO inventory method was used for this tax year enter amount of closing inventory computed under LIFO. 9d If property is produced or acquired for resale do the rules of section 263A apply to the entity See instructions. e f Was there any change in determining quantities cost or valuations between opening and closing inventory If Yes attach explanation. Section references are to the Internal Revenue Code unless otherwise noted* What s New Small business taxpayers. For tax years beginning after December 31 2017 the following apply. below may use a method of accounting for inventories that either 1 treats inventories as nonincidental materials and supplies or 2 conforms to the taxpayer s financial accounting treatment of inventories. Inventories merchandise is an income-producing factor. See Regulations section 1. 471-1. If inventories are required you generally must use an accrual method of accounting for sales and purchases of inventory items. Exception for certain taxpayers. A small business taxpayer defined below can adopt or change its accounting method to account for inventories in the same manner as material and supplies that are nonincidental or conform to its treatment of inventories in an applicable financial statement as defined in section 451 b 3 or if it does not have an applicable financial statement the method of accounting used in its books and records prepared in accordance with its accounting procedures. See section 471 c 3. exemption from the requirement to keep inventories is changing its method of accounting for purposes of section 481.
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