Based on IRS Publication 334 (p. 14 & 15) & 558 (p. 14), I am a qualifying taxpayer that does not have to take inventories into account for the beginning or end of the year. However, I am not a qualifying small business taxpayer due to my business NACIS code 454111 or 446190 (at least these are my best guesses as I read we could also be under the creative arts 711510). Based on the literature in the Schedule 1040 C instructions (p. 14), it reads as an either or situation. Meaning one would either be a qualifying taxpayer or a qualifying small business and not need to meet both conditions to be excluded from counting inventory.

My question to you is this did I read this correctly? If yes, then lines 33 & 34 would be blank and lines 35 & 41 on Part III of Schedule C would be zero correct?