Selling Patio and Outdoor Furniture on Home Improvement Marketplaces: Seasonal Inventory, Warehouse Nexus and Write-Downs

Patio and outdoor furniture is the classic seasonal category: goods ship into U.S. warehouses in winter and early spring and sell mostly in spring and summer. The day inventory lands in a state's warehouse you have physical presence there, regardless of sales; platforms collect sales tax on their orders, but warehouse-state registration and income or franchise tax are yours. Leftover seasonal stock can't simply be written down on an estimate, and when income bunches into a few months, estimated tax can follow an annualized method so you don't overpay early in the year.

Why outdoor furniture is harder on the tax side

Patio sets, umbrellas, grills and swing chairs are bulky, often move by LTL freight, and sell in a short season. Sellers typically land peak-season stock in the U.S. from January to March, sell hardest from April to July, and clear inventory in the fall. That rhythm raises three tax questions: which states hold inventory, how to value year-end stock, and how to time estimated tax.

On home improvement marketplaces, fulfillment also varies. Lowe's Marketplace requires sellers to ship from U.S. warehouses themselves, asks for warehouse states on the application, and expects parcels out within 48 business hours and LTL within 4 business days. Amazon sellers often use FBA, where Amazon spreads goods across states. Wayfair suppliers drop-ship or place goods in CastleGate. When one shipment is split across platforms and warehouses, your state tax footprint is every warehouse combined. Platform rules are covered in our Lowe's guide and Amazon FBA tax guide.

Goods in the warehouse means physical presence

Sales tax

Sales tax nexus comes two ways: economic nexus based on sales, $100,000 a year in most states and $500,000 in California, Texas and New York; and physical presence from inventory, employees or an office, regardless of sales. Seasonal stock arrives before the sales do. If goods enter a Georgia 3PL warehouse in March, you have Georgia physical presence that day.

Sales tax on Lowe's, Amazon and Wayfair orders is collected by the platform as marketplace facilitator, or by the retailer from its customer. But some states require sellers with physical presence to register even when every marketplace order is covered, and sales through your own website, trade shows or local dealers are yours to tax.

Income and franchise tax

Federal P.L. 86-272 protects sellers whose only in-state activity is soliciting orders for tangible goods. Keeping inventory in the state generally falls outside it, so warehouse states usually mean an income tax return, with profit apportioned by the state formula. The law doesn't reach gross-receipts taxes either: inventory in Texas means registering for the franchise tax, where the no-tax-due threshold for 2026 and 2027 reports is $2,650,000 and entities below it still file an information report; Washington B&O is measured on gross receipts; and inventory in California or sales above its thresholds bring the $800 minimum franchise tax.

The easy-to-miss part: temporary peak-season warehouses

Many sellers rent a second or third warehouse just for the season and leave after. A temporary warehouse is still physical presence, and three months of inventory can create that state's obligations for the year. The primary and backup warehouse states on the Lowe's application make a ready list; at the start of each year, pull receiving records from every warehouse and list the states that held inventory.

Inventory cost: duties and inbound freight go in

Purchase price, ocean and inbound freight, duties, brokerage and drayage to the warehouse all go into inventory cost and become cost of goods sold when the goods sell, not in the year you pay. Small businesses with average annual gross receipts over the prior three years of $32,000,000 or less (2026) are exempt from the section 263A uniform capitalization rules and can simplify inventory methods, though sellers with heavy seasonal stock usually get better numbers from actual counts.

On tariffs, as of November 2026, Section 301 tariffs on Chinese-origin goods remain. Among outdoor furniture, upholstered wooden furniture falls under the Section 232 wood products tariff at 25%, with the scheduled increase postponed to January 1, 2027; aluminum and steel furniture may fall under Section 232 steel and aluminum derivative tariffs, depending on the HTS classification and metal content, so check with CBP and your broker. IEEPA duties stopped by the Supreme Court on February 20, 2026 can be refunded to the importer of record; refunds tied to goods already sold are generally booked in the year received, and those tied to goods still on hand reduce inventory cost.

Can you write down leftover seasonal stock?

This is the question patio sellers ask most. For tax, inventory is generally valued at cost, or at the lower of cost or market. Goods that can't be sold at normal prices because of style changes, damage or similar causes can be valued under Treas. Reg. §1.471-2(c) at their bona fide selling price less direct disposal costs, with one key condition: the bona fide selling price generally means goods actually offered for sale at that price within 30 days after the inventory date. A reserve booked because you expect slow sales next year generally isn't allowed for tax.

In practice: list seasonal and damaged goods separately at the year-end count; for goods you plan to clear, actually list them at the markdown price within 30 days and keep listing screenshots and orders; for goods to be scrapped or donated, keep the disposal records. Damaged returns from platforms are handled the same way.

Estimated tax when income comes in the season

By default, corporate and individual estimated tax is spread evenly over four installments. With patio profit concentrated in April through July, the even method can ask for a quarter of the year's tax in January and April, before the goods sell. A C corporation can use the annualized income installment method on Form 2220, and an individual can use Schedule AI of Form 2210, computing each installment on income actually earned to date. That lowers early payments and the risk of underpayment penalties. Basic estimated tax rules are in our estimated tax guide.

An example

Example (hypothetical numbers, to show the method): A Co., a U.S. C corporation, sells patio sets. In February 2026 it lands goods costing $400,000 (including duties and inbound freight) in 3PL warehouses in Georgia and Texas and sells on Lowe's Marketplace and Amazon. By December 31 it has sold goods costing $340,000, leaving $60,000. Of that, $20,000 is last season's style; starting January 10 A Co. lists it at a $12,000 markdown price, with expected disposal costs of $1,000, so under §1.471-2(c) that portion can be valued at $11,000. The remaining $40,000 of regular stock stays at cost.

For state tax, A Co. has physical presence in both Georgia and Texas in 2026: it files Georgia income tax and registers for the Texas franchise tax, owing no Texas tax below $2,650,000 of revenue but still filing the information report. Platforms collect sales tax on their orders; whether either state also wants a sales tax registration depends on that state's rules.

Bottom line

Seasonal inventory comes down to three things: which states hold your goods, how year-end stock is valued, and how estimated tax tracks your income. List warehouse states before you stock up and count and write down by the rules at year-end, and filing season gets much easier. The full picture for selling bulky home goods on Lowe's is in our Lowe's guide. To talk it through, book a free 15-minute call or add WeChat YCLUSA.

Sources

Lowe's: Sell on Lowe's Marketplace (FAQ)

eCFR: 26 CFR §1.471-2, Valuation of inventories

IRS: Publication 538, Accounting Periods and Methods

IRS: Instructions for Form 2220

Texas Comptroller: Franchise Tax

California FTB: Minimum franchise tax

Last verified: November 9, 2026

General tax information only, not tax, legal or investment advice for any individual. Tariff rates follow the latest CBP and USTR notices; consult a professional about your situation.