Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File Amended Return

Federal Tax Forms 2011Form 1040x 2011Irs Gov Irs FormsAmended 2009 Tax Return Instructions2011 Free Efile TaxesTurbotax Amended ReturnNeed To File 2010 TaxesStudents Taxes1040 2012 Tax Form1040ez Worksheet Line 5File 2010 Taxes OnlineIrs Forms 1040ez 20111040x H&r BlockIncome Tax For UnemployedIrs E File 2012Filing Taxes Online 1040ezForgot To File Taxes 2012Tax Cut FreeFile 2011 Income TaxFederal Tax Form 1040 Ez 20111040ez Form 2013 Instructions2040 Ez FormForm 1040ezMilitary ComFree Tax SoftwareState Income Tax Chart1040nr Ez OnlineTax AmendmentsFree Tax Filing For Low IncomeHow To Do An Amended ReturnOnline TaxesFile State Income Tax FreeState Tax Free StatesFile State Return OnlyForm 1040nr InstructionsTaxact Online FreeMilitary Turbo TaxCan I Efile 1040nrFree Efile2011 Tax Forms Federal

File Amended Return

File amended return Publication 969 - Additional Material Prev  Up  Next   Home   More Online Publications
Español

Multifamily Housing Office

The Multifamily Housing Office administers the Department of Housing and Urban Development's multifamily housing programs through a network of local offices across the country.

Contact the Agency or Department

Website: Multifamily Housing Office

Phone Number: (202) 708-1112 (Housing and Urban Development)

TTY: (202) 708-1455 (Housing and Urban Development)

The File Amended Return

File amended return 5. File amended return   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. File amended return Short-term lease. File amended return Retail space. File amended return Qualified long-term real property. File amended return Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. File amended return If there is a connection between any income you receive and your business, the income is business income. File amended return A connection exists if it is clear that the payment of income would not have been made if you did not have the business. File amended return You can have business income even if you are not involved in the activity on a regular full-time basis. File amended return Income from work you do on the side in addition to your regular job can be business income. File amended return You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. File amended return But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. File amended return For information on selling business assets, see chapter 3. File amended return Nonemployee compensation. File amended return Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. File amended return This includes amounts reported as nonemployee compensation in box 7 of the form. File amended return You can find more information in the instructions on the back of the Form 1099-MISC you received. File amended return Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. File amended return In most cases, your business income will be in the form of cash, checks, and credit card charges. File amended return But business income can be in other forms, such as property or services. File amended return These and other types of income are explained next. File amended return If you are a U. File amended return S. File amended return citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. File amended return S. File amended return law. File amended return If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. File amended return For details, see Publication 54, Tax Guide for U. File amended return S. File amended return Citizens and Resident Aliens Abroad. File amended return Bartering for Property or Services Bartering is an exchange of property or services. File amended return You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. File amended return If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. File amended return Example 1. File amended return You are a self-employed lawyer. File amended return You perform legal services for a client, a small corporation. File amended return In payment for your services, you receive shares of stock in the corporation. File amended return You must include the fair market value of the shares in income. File amended return Example 2. File amended return You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. File amended return You must include the fair rental value of the apartment in your gross receipts. File amended return Your landlord must include the fair market value of the work of art in his or her rental income. File amended return Example 3. File amended return You are a self-employed accountant. File amended return Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. File amended return Members get in touch with other members directly and bargain for the value of the services to be performed. File amended return In return for accounting services you provided for the house painter's business, the house painter painted your home. File amended return You must include in gross receipts the fair market value of the services you received from the house painter. File amended return The house painter must include the fair market value of your accounting services in his or her gross receipts. File amended return Example 4. File amended return You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. File amended return As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. File amended return You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. File amended return The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. File amended return It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. File amended return See Publication 15 (Circular E), Employer's Tax Guide. File amended return Example 5. File amended return You operate a plumbing business and use the cash method of accounting. File amended return You join a barter club and agree to provide plumbing services to any member for a specified number of hours. File amended return Each member has access to a directory that lists the members of the club and the services available. File amended return Members contact each other directly and request services to be performed. File amended return You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. File amended return You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. File amended return Information returns. File amended return   If you are involved in a bartering transaction, you may have to file either of the following forms. File amended return Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. File amended return Form 1099-MISC, Miscellaneous Income. File amended return For information about these forms, see the General Instructions for Certain Information Returns. File amended return Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. File amended return , who provides services (maid services, etc. File amended return ) for guests, report the rental income and expenses on Schedule C or C-EZ. File amended return If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. File amended return For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). File amended return Real estate dealer. File amended return   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. File amended return Rent you receive from real estate held for sale to customers is subject to SE tax. File amended return However, rent you receive from real estate held for speculation or investment is not subject to SE tax. File amended return Trailer park owner. File amended return   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. File amended return    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. File amended return Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. File amended return   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. File amended return   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. File amended return Hotels, boarding houses, and apartments. File amended return   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. File amended return   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. File amended return An example of a service that is not normally provided for the convenience of the occupants is maid service. File amended return However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. File amended return Prepaid rent. File amended return   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. File amended return This is true no matter what accounting method or period you use. File amended return Lease bonus. File amended return   A bonus you receive from a lessee for granting a lease is an addition to the rent. File amended return Include it in your gross receipts in the year received. File amended return Lease cancellation payments. File amended return   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. File amended return Payments to third parties. File amended return   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. File amended return A common example of this kind of income is a lessee's payment of your property taxes on leased real property. File amended return Settlement payments. File amended return   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. File amended return Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. File amended return ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. File amended return Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. File amended return If you receive any of those payments, include them in your gross receipts as explained in that discussion. File amended return Interest and Dividend Income Interest and dividends may be considered business income. File amended return Interest. File amended return   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. File amended return Interest received on loans is business income if you are in the business of lending money. File amended return Uncollectible loans. File amended return   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. File amended return If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. File amended return See Bad Debts in chapter 8. File amended return Unstated interest. File amended return   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. File amended return See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. File amended return Dividends. File amended return   Generally, dividends are business income to dealers in securities. File amended return For most sole proprietors and statutory employees, however, dividends are nonbusiness income. File amended return If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. File amended return   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. File amended return To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. File amended return Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. File amended return General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. File amended return Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. File amended return If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. File amended return Exceptions The following discussion covers some exceptions to the general rule for canceled debt. File amended return Price reduced after purchase. File amended return   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. File amended return Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. File amended return Deductible debt. File amended return   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. File amended return Example. File amended return You get accounting services for your business on credit. File amended return Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. File amended return Your accountant forgives part of the amount you owe for the accounting services. File amended return How you treat the canceled debt depends on your method of accounting. File amended return Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. File amended return Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. File amended return   For information on the cash and accrual methods of accounting, see chapter 2. File amended return Exclusions Do not include canceled debt in income in the following situations. File amended return However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. File amended return For more information, see Form 982. File amended return The cancellation takes place in a bankruptcy case under title 11 of the U. File amended return S. File amended return Code (relating to bankruptcy). File amended return See Publication 908, Bankruptcy Tax Guide. File amended return The cancellation takes place when you are insolvent. File amended return You can exclude the canceled debt to the extent you are insolvent. File amended return See Publication 908. File amended return The canceled debt is a qualified farm debt owed to a qualified person. File amended return See chapter 3 in Publication 225, Farmer's Tax Guide. File amended return The canceled debt is a qualified real property business debt. File amended return This situation is explained later. File amended return The canceled debt is qualified principal residence indebtedness which is discharged after 2006. File amended return See Form 982. File amended return If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. File amended return If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. File amended return Debt. File amended return   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. File amended return Qualified real property business debt. File amended return   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. File amended return If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. File amended return Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. File amended return However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. File amended return Cancellation of qualified real property business debt. File amended return   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. File amended return It was incurred or assumed in connection with real property used in a trade or business. File amended return It was secured by such real property. File amended return It was incurred or assumed at either of the following times. File amended return Before January 1, 1993. File amended return After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. File amended return It is debt to which you choose to apply these rules. File amended return   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. File amended return   You cannot exclude more than either of the following amounts. File amended return The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. File amended return The total adjusted bases of depreciable real property held by you immediately before the cancellation. File amended return These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. File amended return Do not take into account depreciable real property acquired in contemplation of the cancellation. File amended return Election. File amended return   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. File amended return You must file your return by the due date (including extensions). File amended return If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File amended return For more information, see When To File in the form instructions. File amended return Other Income The following discussion explains how to treat other types of business income you may receive. File amended return Restricted property. File amended return   Restricted property is property that has certain restrictions that affect its value. File amended return If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. File amended return However, you can choose to be taxed in the year you receive the property. File amended return For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. File amended return Gains and losses. File amended return   Do not report on Schedule C or C-EZ a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. File amended return Instead, you must report these gains and losses on other forms. File amended return For more information, see chapter 3. File amended return Promissory notes. File amended return   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. File amended return In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. File amended return Lost income payments. File amended return   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. File amended return Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. File amended return Damages. File amended return   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. File amended return Patent infringement. File amended return Breach of contract or fiduciary duty. File amended return Antitrust injury. File amended return Economic injury. File amended return   You may be entitled to a deduction against the income if it compensates you for actual economic injury. File amended return Your deduction is the smaller of the following amounts. File amended return The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. File amended return Your loss from the injury that you have not yet deducted. File amended return Punitive damages. File amended return   You must also include punitive damages in income. File amended return Kickbacks. File amended return   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. File amended return However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. File amended return Recovery of items previously deducted. File amended return   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. File amended return However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. File amended return If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. File amended return Example. File amended return Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. File amended return He also had 2 personal exemptions for a total of $7,800. File amended return He would not pay income tax even if he did not deduct the bad debt. File amended return Therefore, he will not report as income any part of the $300 he may recover in any future year. File amended return Exception for depreciation. File amended return   This rule does not apply to depreciation. File amended return You recover depreciation using the rules explained next. File amended return Recapture of depreciation. File amended return   In the following situations, you have to recapture the depreciation deduction. File amended return This means you include in income part or all of the depreciation you deducted in previous years. File amended return Listed property. File amended return   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. File amended return You do this by including in income on Schedule C part of the depreciation you deducted in previous years. File amended return Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. File amended return For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. File amended return That chapter explains how to determine whether property is used more than 50% in your business. File amended return Section 179 property. File amended return   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. File amended return You do this by including in income on Schedule C part of the deduction you took. File amended return Use Part IV of Form 4797 to figure the amount to include on Schedule C. File amended return See chapter 2 in Publication 946 to find out when you recapture the deduction. File amended return Sale or exchange of depreciable property. File amended return   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. File amended return You figure the income due to depreciation recapture in Part III of Form 4797. File amended return For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. File amended return Items That Are Not Income In some cases the property or money you receive is not income. File amended return Appreciation. File amended return   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. File amended return Consignments. File amended return   Consignments of merchandise to others to sell for you are not sales. File amended return The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. File amended return Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. File amended return Merchandise you have shipped out on consignment is included in your inventory until it is sold. File amended return   Do not include merchandise you receive on consignment in your inventory. File amended return Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. File amended return Construction allowances. File amended return   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. File amended return Under a short-term lease of retail space. File amended return For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. File amended return Amount you can exclude. File amended return   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. File amended return Short-term lease. File amended return   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. File amended return The following rules apply in determining whether the lease is for 15 years or less. File amended return Take into account options to renew when figuring whether the lease is for 15 years or less. File amended return But do not take into account any option to renew at fair market value determined at the time of renewal. File amended return Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. File amended return Retail space. File amended return   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. File amended return Qualified long-term real property. File amended return   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. File amended return Exchange of like-kind property. File amended return   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. File amended return This means that the gain is not taxable and the loss is not deductible. File amended return A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. File amended return For more information, see Form 8824. File amended return Leasehold improvements. File amended return   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. File amended return However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. File amended return Loans. File amended return   Money borrowed through a bona fide loan is not income. File amended return Sales tax. File amended return   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. File amended return Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). File amended return Direct seller. File amended return   You must report all income you receive as a direct seller on Schedule C or C-EZ. File amended return This includes any of the following. File amended return Income from sales—payments you receive from customers for products they buy from you. File amended return Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. File amended return Prizes, awards, and gifts you receive from your selling business. File amended return You must report this income regardless of whether it is reported to you on an information return. File amended return   You are a direct seller if you meet all the following conditions. File amended return You are engaged in one of the following trades or businesses. File amended return Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. File amended return Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). File amended return Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. File amended return Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. File amended return Executor or administrator. File amended return   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. File amended return A nonprofessional fiduciary (personal representative) and both of the following apply. File amended return The estate includes an active trade or business in which you actively participate. File amended return Your fees are related to the operation of that trade or business. File amended return A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. File amended return    If the fees do not meet the above requirements, report them on line 21 of Form 1040. File amended return Fishing crew member. File amended return    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . File amended return Insurance agent, former. File amended return   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. File amended return You received payments after your agreement to perform services for the company ended. File amended return You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. File amended return You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. File amended return The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. File amended return The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). File amended return Insurance agent, retired. File amended return   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. File amended return Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. File amended return   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. File amended return Newspaper carrier or distributor. File amended return   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. File amended return You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). File amended return Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. File amended return You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. File amended return   This rule applies whether or not you hire others to help you make deliveries. File amended return It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. File amended return Newspaper or magazine vendor. File amended return   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. File amended return You sell newspapers or magazines to ultimate consumers. File amended return You sell them at a fixed price. File amended return Your earnings are based on the difference between the sales price and your cost of goods sold. File amended return   This rule applies whether or not you are guaranteed a minimum amount of earnings. File amended return It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. File amended return Notary public. File amended return   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. File amended return These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). File amended return Public official. File amended return   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. File amended return This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. File amended return Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. File amended return   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. File amended return Real estate agent or direct seller. File amended return   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. File amended return Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. File amended return You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. File amended return Securities dealer. File amended return   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. File amended return For more information, see sections 1256 and 1402(i). File amended return Securities trader. File amended return   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. File amended return As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. File amended return However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. File amended return For more information about securities traders, see Publication 550, Investment Income and Expenses. File amended return Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. File amended return This section discusses some of the more common differences that may affect business transactions. File amended return Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). File amended return If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. File amended return Dealers in real estate are not allowed to use inventories. File amended return For more information on inventories, see chapter 2. File amended return Income paid to a third party. File amended return   All income you earn is taxable to you. File amended return You cannot avoid tax by having the income paid to a third party. File amended return Example. File amended return You rent out your property and the rental agreement directs the lessee to pay the rent to your son. File amended return The amount paid to your son is gross income to you. File amended return Cash discounts. File amended return   These are amounts the seller permits you to deduct from the invoice price for prompt payment. File amended return For income tax purposes, you can use either of the following two methods to account for cash discounts. File amended return Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). File amended return Credit the cash discount to a discount income account. File amended return You must use the chosen method every year for all your purchase discounts. File amended return   If you use the second method, the credit balance in the account at the end of your tax year is business income. File amended return Under this method, you do not reduce the cost of goods sold by the cash discounts you received. File amended return When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. File amended return Trade discounts. File amended return   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. File amended return Do not enter these discounts on your books of account. File amended return Instead, use only the net amount as the cost of the merchandise purchased. File amended return For more information, see Trade discounts in chapter 6. File amended return Payment placed in escrow. File amended return   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. File amended return However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. File amended return Sales returns and allowances. File amended return   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. File amended return Advance payments. File amended return   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. File amended return Insurance proceeds. File amended return   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. File amended return You cannot deduct the reimbursed part of a casualty or theft loss. File amended return   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. File amended return Prev  Up  Next   Home   More Online Publications