Profit or Loss From Business
Use 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 activity, see the instructions for Form 1040, line 21, or Form 1040NR, line
21.
Also, use Schedule C to report (a) wages and expenses you had as a statutory employee, (b) income and deductions of qualified
joint ventures, and (c) certain income shown on Form 1099-MISC, Miscellaneous Income. See the Instructions for Recipients (back of Copy B of Form 1099-MISC) for the types of income to report on Schedule C.
Small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule
C. See Schedule C-EZ for details.
You 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 information.
Single–member limited liability companies (LLCs) with employees.
Single-member LLCs that are disregarded as entities separate from their owner for federal income tax purposes are
now required to file employment tax returns (effective for wages paid on or after January 1, 2009) using the LLC's name and
employer identification number (EIN) rather than the LLC owner's name and EIN. This new requirement to use the LLC's name
and EIN also went into effect for certain excise tax returns beginning in 2008. Single-member LLCs not previously needing
an EIN may now need to obtain an EIN for the payment and reporting of these taxes. For more information, see the Instructions
for Form SS-4.
Increased section 179 deduction extended.
The dollar limit for the section 179 deduction to expense certain depreciable business property is $250,000 for property
placed in service in 2009. This limit will be reduced when the total cost of section 179 property placed in service during
the tax year exceeds $800,000. For more information, see Pub. 946.
Special depreciation allowance.
For qualifying property acquired and placed in service in 2009, you may be able to take a depreciation deduction equal
to 50% of the adjusted basis of the property. Qualifying property includes certain property with a recovery period of 20 years
or less, certain computer software, water utility property, or qualified leasehold improvements. For more information, see
Pub. 946.
