 So exception for small business taxpayers. So if you are a small business taxpayer, you can choose not to keep an inventory, but you must still use a method of accounting for inventory that clearly reflects income. So if you choose not to keep an inventory, you won't be treated as failing to clearly reflect income in your method of accounting for inventory, treats inventory as non-incidental material or supplies or conforms to your financial accounting treatment of inventories. So however, if you choose to keep an inventory, you must generally use an accrual method of accounting and value the inventory each year to determine your cost of goods sold in part three of Schedule C. So note that if you're in a situation where you sell stuff, but really you kind of buy stuff in particular or an adjusting time type of system or in part of your job cost system, you buy inventory and then you consume it and you build something or you sell it right away, that would mean that you're not really holding on to inventory at that point. And if you're in a small business, you might be able to do your accounting, even though you're selling inventory without tracking an asset of inventory. You could basically, in essence, expense the inventory as cost of goods sold when you purchase it because you purchased it close to the point in time that you are actually going to sell it, sell the inventory. So it's still those two things, the income and the expense of cost of goods sold should still be close in the same time frame because you're not really holding on to the inventory. If however, you are holding on to inventory, you have to track the inventory, then clearly you can't really avoid that situation. So you'd have to do basically an accrual method you would think in that case. Now, if you're using an accrual method, you can see this part three of the schedule C, which is basically a cost of goods sold calculation, you're going to have to figure out, which sometimes can be a little bit tricky because it's kind of a perpetual inventory calculation of the cost to get sold, the formula, you may know the formula, it's going to be beginning inventory, which is the ending inventory, it should match the ending inventory from the prior tax here, plus the purchases, which you purchase for inventory minus the ending inventory, which is probably something that you have on records, you might not have the purchases and you might back into the purchases and that will equal the cost of goods sold. And oftentimes, if you use accounting software, you might know the cost of goods sold as well. So you might back into, in essence, the purchases using algebra in some cases to fill out that part three of the schedule C. So small business taxpayers, you qualify as a small business taxpayer if you a have average annual gross receipts of $27 million or less for the three prior prior tax years and B are not a tax shelter as defined in section 448d3. If your business has not been in existence for all of the three tax year period used in figuring average gross receipt base your average on the period it has existed. And if your business has a predecessor entity, include the gross receipt of the predecessor entity from the three tax year period when figuring average gross receipts. If your business or predecessor entity had short tax years for any of the three year period, analyze your business gross receipt for the short tax year that are part of the three year period. You can see publication 538 for more information. If you want to drill down on that