Booking materials used for goods sold?

Question

My husband is a photographer. Usually, his expenses are equipment and supplies. (He typically will shoot photos for a business and then transfer them digitally. The customer pays him for his shooting time and some basic editing.) However, he recently had a show where he sold some of his photos. How do I categorize the expenses that went into the photos beforehand, e.g. frames, framing costs, printing, etc.?

Scooterlam · Accepted Answer

Image sales are booked to a category with the "Tax Reporting" line assigned to Schedule C:Gross Receipts or Sales.  And the expenses necessary to produce the photo sale revenue booked to a category with the "Tax Reporting" line assigned to one or more of the Schedule C "CoGs" related tax lines.  See image.

You assign a tax line to the category (using edit category in the Category List) to report on those framing, printing, etc costs in your business and tax reports.