Tax Prep Validation : Form 1125-A
Hello - Thank you for your guidance validating details of a Return for my small retail business. Our CPA recently completed our 2022 Return (Accrual accounting) and Form 1125-A (Cost of Goods Sold) showed a value on line 8 of -$36457. A negative COGS value suggests an issue somewhere. In the end, we found that line 2 of Form 1125-A was completed using the COGS value from our year end P&L Report. Changing line 2 to the value of total expenses paid for goods (not just the sold goods) resolved the negative COGS value and reduced our income liability by $92k. My question is about line 2 on Form 1125-A. Was it an error to complete this line using the already calculated COGS value from our year end P&L Report? I think I know the answer but our CPA is standing his ground and we need a second opinion. Thank you for your prompt reply!
