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If you're an S corporation owner with inventory, you could be missing out on a MASSIVE tax deduction. Most business owners don't know this, but the Tax Cuts and Jobs Act created a loophole that lets you deduct 100% of your inventory - even the stuff you haven't sold yet. Your accountant probably isn't telling you about this.

Here's how the old rules worked: You buy $100,000 in inventory, sell $30,000 worth, and you're stuck with a $70,000 ending inventory you CAN'T deduct. You only got to write off the $30,000 you actually sold. That's the old Section 471 rules that most CPAs are still following.

But here's what changed: If your gross receipts are under $31 million (which makes you a "small business" in the IRS's eyes), you can now elect the non-AFS Section 471(c) method and deduct your ENTIRE inventory purchase immediately. That same $100,000 in inventory? 100% deductible. Even if $70,000 is still sitting in your warehouse.

The secret is Form 3115 - a change in accounting method form. You file it with your tax return, IRS automatically approves it, and boom - you unlock this deduction. No waiting. No back and forth with the IRS.

Want to know exactly how much you're missing? Pull up your last tax return, find Form 1125-A, and look at line 7. That's your ending inventory - money you couldn't deduct before but CAN deduct now using this strategy.

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