Farm - Change from accrual to cash. Inventory?

[Jack from Ohio]

I have a farmer that wishes to change from accrual to cash.  I know how to fill out 3115 to accomplish the change. Here is my question:

There is inventory involved.  How do I treat it when making the accounting method change?

Do I carry it over as inventory until sold, then use the basis as COGS?

Do I expense the inventory and have no COGS when sold?

I am certain, someone on the board has experience.

[Catherine]

Good luck.  I thought if there was any inventory involved, accrual must be used *at least for the inventory portion* in a hybrid system.  But farms have lots of rules that apply to farms only.

So, laddie, the best I can tell ye is I havenae a clue!  (Said with a strong Scots accent.)

[DANRVAN]

Depends.  If there is stored wheat or calves raised by the farmer they would be a section 481(a) adjustment.  If there are calves purchased for resale he would continue to treat as inventory under the cash method.

 

[Jack from Ohio]

Thank you for the help.  I understand the hybrid method.  Next question:

When I mark the farm as cash method, the ability to input inventory goes away.  How/where do you input the inventory under the cash method?

[DANRVAN]

You just input the cost of sale on line 1b of Schedule F, there is nowhere to input the beginning and ending inventory. 

[WITAXLADY]

I carry them in fixed assets under non depreciable until sold or placed into service so not forgotten

[DANRVAN]

39 minutes ago, WITAXLADY said:

I carry them in fixed assets under non depreciable until sold or placed into service so not forgotten

So do I,  I use an asset program outside of ATX.