How do I record an item taken out of inventory for personal use/a gift?

Accrual inventory users:

For items that were purchased during the current year, you can simply remove them from MRG (since they are not business inventory anymore, they can be treated like they were never business inventory). For items that were purchased in a prior year, best thing to do would be talk to your accountant about how they want you to handle it -- one possible option would be to buy the item from your business for the purchase price of the item (that way, it shows a profit of $0, and removes the item from inventory without changing the beginning inventory balance).

Cash inventory users:

Since you have already expensed the item, you will need to credit your inventory cost for the cost of the item. You would record this as a negative expense in the "Expense Detail".