You have a choice of reporting on a cash or accrual basis...
If you report on a cash basis, you don't have "inventory" per se.... You deduct what you PAID for and do not deduct any payables.
When you sell the items, you cannot reduce the income by your cost of inventory since you already took the deduction and "double dipping" is not allowed.
As a part-time, home based business, are you registered as a business with your local authorities? Do you have a business account, resale number, etc.?
At the hobby level there are choices but you must make a profit within a certain number of years or you will not be able to deduct your costs..
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