I am prepping a new manufacturing client's 1065. They only capitalize and flush materials through their inventory process, excluding direct labor and other indirect manufacturing costs that should generally be include even before additional 263A items. Their COGS on the income statement is therefore a list of expensed direct labor, spoilage, distribution/storage, other production costs and then materials COGS (average cost method). When trying to apply 263A and fill out the 1125-A , I have run into tons of difficulties/questions. Anyone faced a similar situation that would be willing to discuss my options here?