What is considered inventory for income tax purposes?

Inventory for income tax purposes refers specifically to items that a business holds for sale in the regular course of its operations. This means that the inventory includes goods that are produced, purchased, or otherwise acquired for the purpose of selling them to customers. For a business, accurate reporting of inventory is crucial because it impacts cost of goods sold and ultimately taxable income.

The correct understanding of inventory is essential for categorizing items accurately on financial statements and tax returns. Businesses must keep track of the inventory they possess to ensure proper reporting of expenses and revenues, which will affect their overall tax liability.

The alternative choices, while they may seem related to the concept of inventory, do not specifically define it properly for income tax purposes. For instance, all assets owned by a business encompass a much broader category, including items that are not meant for sale, such as machinery and equipment. A list of articles held for investment could pertain to securities or other investment products rather than items for sale. Lastly, items purchased solely for employee use would not constitute inventory because they are not intended to be resold in the normal course of business operations. Thus, option C accurately captures the essential characteristics of inventory relevant to income tax considerations.