For a C Corp:

• If your COGS on Form 1125-A is $6,017 less than the income statement, the difference is usually due to inventory discrepancies (like negative inventory).

• The IRS requires COGS based on actual beginning and ending inventory plus purchases, not just the income statement.

• Adjust COGS on Form 1125-A to reflect accurate inventory counts; any prior errors should not be carried forward.

• Document the adjustment and keep records of the inventory count for IRS reference.

[Content Removed]  We help small businesses reconcile book vs. tax COGS, correct inventory errors, and ensure accurate 1125-A reporting for compliance and optimal tax treatment.