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Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year.If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.

Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities.

Online resources for recognizing and reporting trafficking activities, and assisting victims include the Department of Homeland Security (DHS) Blue Campaign at, the Department of State Office to Monitor and Combat Trafficking in Persons at, and the National Human Trafficking Resource Center (NHTRC) at Victims are crucial to investigations and prosecutions; each case and every conviction changes lives.

DHS is responsible for investigating human trafficking, arresting traffickers, and protecting victims. DHS understands how difficult it can be for victims to come forward and work with law enforcement due to their trauma.

For help from the NHTRC, call the National Human Trafficking Hotline toll free at 1-888-373-7888 or text HELP or INFO to Be Free (233733).

This chapter covers the general rules for deducting business expenses.

An ordinary expense is one that is common and accepted in your industry.

A necessary expense is one that is helpful and appropriate for your trade or business.

The chapters that follow cover specific expenses and list other publications and forms you may need.

We welcome your comments about this publication and your suggestions for future editions. Click on "More Information" and then on "Give us feedback." Or you can write to: We respond to many letters by telephone.

If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold.

Some of your business expenses may be included in figuring cost of goods sold.

Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.