40 — Add Lines 35 Through 39 Updated for tax year 2025

What this line means

A simple addition: the sum of lines 35 through 39. This represents the total of beginning inventory plus all costs added during the year — purchases, labor, materials, and other production costs. Ending inventory (line 41) is subtracted from this total on line 42 to determine your actual cost of goods sold. Tax software calculates this automatically.

Does this apply to you?

• Every filer who completes Part III reaches this calculated line
• Tax software fills this in automatically
• Paper filers add lines 35 through 39 manually

Easy to overlook

This total represents goods available for sale, not goods sold This line is the total cost of everything that could have been sold during the year — beginning stock plus new additions. You have not yet subtracted what remains unsold (ending inventory). The cost of goods actually sold is not determined until line 42. ¹ [SOURCE: IRS Schedule C instructions — Part III, Line 40]

Errors on any input line cascade here If any of lines 35 through 39 are wrong, this total is wrong, and so is the cost of goods sold on line 42. Before accepting this number, verify each component line — especially beginning inventory, which should match last year’s ending inventory. ² [SOURCE: General filing pattern — math errors on calculated lines]

Watch out for this

Making an arithmetic error when adding five lines on a paper return. Even a simple transposition on one line affects cost of goods sold, gross profit, and net profit. E-filing eliminates this risk. If filing on paper, use a calculator and double-check.

Related lines on your return

• Lines 35-39 — Schedule C — The five component lines that add up to this total
• Line 41 — Schedule C — Ending inventory; subtracted from this line on line 42
• Line 42 — Schedule C — Cost of goods sold; this line minus line 41