From Business Profit or Loss - IRS tax forms

1 Userid: CPMS chema: i1040xLeadpct: 95%Pt. size: 10 Draft Ok to PrintAH XSL/XMLF ileid: .. /I1040 SCHC/2018/A/XML/Cycle07/source(Init. & Date) _____Page 1 of 18 11:12 - 16-Nov-2018 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before of the TreasuryInternal Revenue Service2018 instructions for schedule CProfit or Loss From BusinessUse schedule C ( form 1040) to report income or (loss) from a Business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a Business if your primary purpose for engaging in the activity is for income or Profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a Business . To report income from a nonbusiness activi-ty, see the instructions for schedule 1 ( form 1040), line 21, or form 1040NR, line , use schedule C to report (a) wages and expenses you had as a statutory em-ployee, (b) income and deductions of certain qualified joint ventures, and (c) certain income shown on form 1099-MISC, Miscellaneous Income.

2 See the instructions for Recipient (back of Copy B of form 1099-MISC) for the types of income to report on schedule businesses and statutory employees with Business expenses of $5,000 or less may be able to file schedule C-EZ instead of schedule C. See schedule C-EZ for may be subject to state and local taxes and other requirements such as Business licenses and fees. Check with your state and local governments for more references are to the Internal Revenue Code unless otherwise DevelopmentsFor the latest information about devel-opments related to schedule C and its instructions , such as legislation enacted after they were published, go to 's NewSmall Business taxpayers. For tax years beginning after 2017, more small Business taxpayers (defined later in Part III) may qualify to use the cash method of accounting and be exempt from capi-talizing certain expenses under section 263A.

3 In addition, small Business tax-payers may not be required to account for inventories under section 471 and are not subject to the Business interest ex-pense Business loss limitation. If you report a loss on line 31 of your Sched-ule C ( form 1040), you may be subject to a new Business loss limitation. The disallowed loss resulting from this new limitation will not be reflected on line 31 of your schedule C. Instead, use the new form 461 to determine the amount of your excess Business loss, which will be included as income on schedule 1 ( form 1040), line 21. Any disallowed loss resulting from this limi-tation will be treated as a net operating loss that must be carried forward and de-ducted in a subsequent year. See form 461 and its instructions for details on the excess Business loss for qualified Business in-come.

4 For tax years beginning after 2017, you may be entitled to a deduction of up to 20% of your qualified Business income from your qualified trade or businesses plus 20% of the aggregate amount of qualified real estate invest-ment trust (REIT) dividends and quali-fied publicly traded partnership income. The deduction is subject to various limi-tations, such as limitations based on the type of your trade or Business , your tax-able income, the amount of W-2 wages paid with respect to the qualified trade or Business , and the unadjusted basis of qualified property held by your trade or Business . You will claim this deduction on form 1040, not on schedule C. Un-like other deductions, this deduction can be taken in addition to the standard or itemized deductions. For more informa-tion, see the instructions for form 1040 and Pub.

5 Interest expense limitation. For tax years beginning after 2017, your Business interest expense deduction may be limited. See Limitation on Business interest under Lines 16a and 16b, later, for more for Business meal and en-tertainment expenses. You can no lon-ger deduct entertainment expenses. You may still deduct 50% of your Business meal expenses that are not entertainment expenses. See Line 24b, later, for more information about deducting Business meal employment credits. At the time these instructions went to print, the empowerment zone employment credit and the Indian employment credit had expired. If extended for 2018, claiming these credits could affect the amount you can deduct on line 26. To find out if legislation extended these credits, go to mileage rate. The Business standard mileage rate for 2018 increased to cents per Business and Self-Employed (SB/SE) Tax Center.

6 Do you need help with a tax issue or preparing your return, or do you need a free publication or form ? SB/SE serves taxpayers who file form 1040, Schedules C, E, F, or form 2106, as well as small Business taxpay-ers with assets under $10 million. For additional information, visit the Small Business and Self-Employed Tax Center at Economy Tax Center. The sharing (or on-demand, gig, or access) economy refers to an emerging area of activity that involves people using tech-nology advancements to arrange transac-tions that generate revenue from sharing assets or providing services upon re-quest. Visit to get more information about the tax consequences of participating in the sharing 16, 2018 Cat. No. 24329 WPage 2 of 18 Fileid: .. /I1040 SCHC/2018/A/XML/Cycle07/source11:12 - 16-Nov-2018 The type and rule above prints on all proofs including departmental reproduction proofs.

7 MUST be removed before InstructionsOther Schedules and forms You May Have To File schedule A ( form 1040) to deduct interest, taxes, and casualty losses not related to your Business . schedule E ( form 1040) to report rental real estate and royalty income or (loss) that is not subject to self-employment tax. schedule F ( form 1040) to report Profit or (loss) from farming. schedule J ( form 1040) to figure your tax by averaging your farming or fishing income over the previous 3 years. Doing so may reduce your tax. schedule SE ( form 1040) to pay self-employment tax on income from any trade or Business . form 461 to report your excess Business loss. form 3800 to claim any of the general Business credits. form 4562 to claim depreciation (including the special allowance) on assets placed in service in 2018, to claim amortization that began in 2018, to make an election under section 179 to expense certain property, or to report information on listed property.

8 form 4684 to report a casualty or theft gain or (loss) involving property used in your trade or Business or income-producing property. form 4797 to report sales, exchanges, and involuntary conversions (not from a casualty or theft) of trade or Business property. form 6198 to apply a limitation to your loss if you have a Business loss and you have amounts invested in the Business for which you are not at risk. form 8582 to apply a limitation to your loss from passive activities. form 8594 to report certain purchases or sales of groups of assets that constitute a trade or Business . form 8824 to report like-kind exchanges. form 8829 to claim actual expenses for Business use of your home. form 8990 to determine whether your Business interest deduction is , see the Qualified Business Income Deduction Worksheet in the instructions for form 1040 or Pub.

9 535 to figure a deduction for qualified Business limited liability com-pany (LLC). Generally, a single-mem-ber domestic LLC is not treated as a sep-arate entity for federal income tax purposes. If you are the sole member of a domestic LLC, file schedule C or C-EZ (or schedule E or F, if applicable) unless you have elected to treat the do-mestic LLC as a corporation. See form 8832 for details on making this election and for information about the tax treat-ment of a foreign limited liability com-panies (LLCs) with employees. A sin-gle-member LLC must file employment tax returns using the LLC's name and employer identification number (EIN) rather than the owner's name and EIN, even if the LLC is not treated as a sepa-rate entity for federal income tax highway vehicle use tax. If you use certain highway trucks, truck-trail-ers, tractor-trailers, or buses in your trade or Business , you may have to pay a federal highway motor vehicle use tax.

10 See the instructions for form 2290 to find out if you must pay this tax and vis-it for the most recent returns. You may have to file information returns for wages paid to employees, certain payments of fees and other nonemployee compensation, interest, rents, royalties, real estate trans-actions, annuities, and pensions. See Line I, later, and the 2018 General In-structions for Certain Information Re-turns for details and other payments that may require you to file a form you received cash of more than $10,000 in one or more related transac-tions in your trade or Business , you may have to file form 8300. For details, see Pub. Owned and Operated by SpousesGenerally, if you and your spouse joint-ly own and operate an unincorporated Business and share in the profits and los-ses, you are partners in a partnership, whether or not you have a formal part-nership agreement.