etsy spreadsheet | Materials Inventory & COGS 2026

What the page does, and its sources

• Lines 33 to 42 follow the Schedule C (Form 1040) 2026 form, Part III Cost of Goods Sold (irs.gov/pub/irs-pdf/f1040sc.pdf, read 2026-11-12): 35 inventory at beginning of year, 36 purchases less cost of items withdrawn for personal use, 37 cost of labor (not amounts paid to yourself), 38 materials and supplies, 39 other costs, 40 add lines 35 through 39, 41 inventory at end of year, 42 = line 40 minus line 41, entered on line 4.
• Line 33: the page values closing inventory at cost. Raw materials take the cost of your latest purchases (first in, first out). A finished piece takes its recipe materials at those prices; labor is not spread into finished pieces. If you value another way, change line 41 in the Excel file.
• The 2025 Instructions for Schedule C say a small business taxpayer (average annual gross receipts of 31 million dollars or less for the 3 prior tax years, indexed for inflation, and not a tax shelter) can choose not to keep an inventory, and treat it as non-incidental materials and supplies or follow its books. See Pub. 538. This page is for sellers who keep an inventory.
• Made = sold in the Etsy file + counted on the shelf at 12/31 − on the shelf at 1/1. Book quantity = opening + bought − used in what you made. Missing = book − counted, priced at your latest purchases. Missing stock is not a separate deduction: it is already inside line 42.
• Etsy help (How to Download a Spreadsheet of Your Sold Transactions): the Orders download includes item title, item price and SKU numbers. Column names are matched by name, so extra or reordered columns are fine.
• Not tax advice. The page does the arithmetic on your numbers; check them with your tax preparer.