A baker's ingredients belongs on Part III line 38, part iii line 38, materials and supplies.
Why part iii line 38
Flour, butter, sugar and chocolate become the product the customer buys, so their cost is Part III materials and supplies and reaches the return through cost of goods sold. Line 22 is for supplies not included in Part III, which is exactly what excludes a producer's ingredients from it. The deciding question is whether the business produces or resells goods and accounts for inventory. If it does, the cost of anything that becomes part of a product sold belongs in Part III and reaches the return through cost of goods sold, not line 22. A small business taxpayer under the gross receipts test can treat stock as non incidental materials and supplies and deduct it when used or sold, which still reports in Part III.
Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for a baker's ingredients is already written down.
Start for freeWhat a baker's ingredients is confused with
- Line 22, supplies
- Ingredients that go into the product are Part III, while parchment, piping bags and cleaning chemicals consumed running the kitchen are line 22 supplies.
- Part III line 36, part iii line 36, purchases less personal use
- Finished goods you buy in to resell, such as bought in bread or bottled drinks, are purchases on Part III line 36 rather than materials on line 38.
- Line 13, depreciation and section 179 expense deduction
- The mixer, proofer and oven last more than a year and are capital assets reaching line 13.
Examples that belong on part iii line 38
- $640 of flour, butter and sugar for a month of orders
- $180 of couverture chocolate for a wedding cake run
- $95 of yeast, salt and improver
- $240 of fruit and dairy bought weekly for a market stall
- $1,980 of ingredients counted into cost of goods sold for the year
What does not belong here
- Line 22, which excludes anything reported in Part III.
- Groceries for the household.
- Boxes and ribbon used to carry the order, which are line 22.
- The oven and mixer, which are capital assets.
The limit that applies
A small business taxpayer meeting the gross receipts test can treat inventory as non incidental materials and supplies, deductible when used or sold. The threshold is indexed and set each year.
What to keep
Keep the supplier invoices and a year end count of unused stock, because cost of goods sold is computed from opening stock, purchases and closing stock. Keep household grocery shopping on a different card entirely.
Other expenses on part iii line 38
| Expense | Line |
|---|---|
| printing consumables for a print on demand seller | Part III line 38 |
| raw materials | Part III line 38 |
Related lookups
- Where do job materials go on Schedule C?
- Where does inventory go on Schedule C?
- Where does capex go on Schedule C?
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for a baker's ingredients is already written down.
Start for free