General Instructions

Other 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 3800 to claim any of the general business credits.

  • Form 4562 to claim depreciation (including the special allowance) on assets placed in service in 2013, to claim amortization that began in 2013, to make an election under section 179 to expense certain property, or to report information on listed property.

  • 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 figure your allowable 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 figure your allowable 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 8903 to take a deduction for income from domestic production activities.

Single-member limited liability company (LLC).   Generally, a single-member domestic LLC is not treated as a separate 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). However, you can elect to treat a domestic LLC as a corporation. See Form 8832 for details on the election and the tax treatment of a foreign LLC.

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 required to file employment tax returns using the LLC's name and employer identification number (EIN) rather than the LLC owner's name and EIN. For more information, see the Instructions for Form SS-4.

Heavy highway vehicle use tax.   If you use certain highway trucks, truck-trailers, tractor-trailers, or buses in your trade or business, you may have to pay a federal highway motor vehicle use tax. See the Instructions for Form 2290 to find out if you must pay this tax and visit www.irs.gov/trucker for the most recent developments.

Information 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 transactions, annuities, and pensions. See Line I, later, and the 2013 General Instructions for Certain Information Returns for details and other payments that may require you to file a Form 1099.

  If you received cash of more than $10,000 in one or more related transactions in your trade or business, you may have to file Form 8300. For details, see Pub. 1544.

Qualified Joint Venture

If you and your spouse each materially participate (see Material participation, later, in the instructions for line G) as the only members of a jointly owned and operated business and you file a joint return for the tax year, you can elect to be treated as a qualified joint venture instead of a partnership. This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage. By making the election, you will not be required to file Form 1065 for any year the election is in effect and will instead report the income and deductions directly on your joint return. If you and your spouse filed a Form 1065 for the year prior to the election, the partnership terminates at the end of the tax year immediately preceding the year the election takes effect.

Note.

Mere joint ownership of property that is not a trade or business does not qualify for the election.

Making the election.   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Each of you must file a separate Schedule C, C-EZ, or F. On each line of your separate Schedule C, C-EZ, or F, you must enter your share of the applicable income, deduction, or loss. Each of you must also file a separate Schedule SE to pay self-employment tax, as applicable.

  Once made, the election can be revoked only with the permission of the IRS. However, the election technically remains in effect only for as long as the spouses filing as a qualified joint venture continue to meet the requirements for filing the election. If the spouses fail to meet the qualified joint venture requirements for a year, a new election will be necessary for any future year in which the spouses meet the requirements to be treated as a qualified joint venture.

  The election generally does not require that you and your spouse obtain an employer identification number (EIN) since you and your spouse will file as sole proprietors. However, you may need an EIN to file other returns such as employment or excise tax returns. To apply for an EIN, see the Instructions for Form SS-4.

  For more information on qualified joint ventures, go to IRS.gov and enter “qualified joint venture” in the search box.

Rental real estate business.   If you and your spouse make the election for your rental real estate business, you must each report your share of income and deductions on Schedule E. Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to the passive loss limitation rules. Electing qualified joint venture status does not alter the application of the self-employment tax or the passive loss limitation rules.

Business Owned and Operated by Spouses

Generally, if you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. You generally have to file Form 1065 instead of Schedule C or C-EZ for your joint business activity; however, you may not have to file Form 1065 if either of the following applies.

  • You and your spouse elect to be treated as a qualified joint venture. See Qualified Joint Venture, earlier.

  • You and your spouse wholly own the unincorporated business as community property and you treat the business as a sole proprietorship. See Exception—community income next.

Otherwise, use Form 1065. See Pub. 541 for more details.

Exception—community income.   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U.S. possession, you can treat your wholly-owned, unincorporated business as a sole proprietorship, instead of a partnership. Any change in your reporting position will be treated as a conversion of the entity.

  Report your income and deductions as follows.
  • If only one spouse participates in the business, all of the income from that business is the self-employment earnings of the spouse who carried on the business.

  • If both spouses participate, the income and deductions are allocated to the spouses based on their distributive shares.

  • If either or both you and your spouse are partners in a partnership, see Pub. 541.

  • If you and your spouse elected to treat the business as a qualifying joint venture, see Qualified Joint Venture, earlier.

  The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Reportable Transaction Disclosure Statement

Use Form 8886 to disclose information for each reportable transaction in which you participated. Form 8886 must be filed for each tax year that your federal income tax liability is affected by your participation in the transaction. You may have to pay a penalty if you are required to file Form 8886 but do not do so. You may also have to pay interest and penalties on any reportable transaction understatements. The following are reportable transactions.

  • Any listed transaction that is the same as or substantially similar to tax avoidance transactions identified by the IRS.

  • Any transaction offered to you or a related party under conditions of confidentiality for which you paid an advisor a fee of at least $50,000.

  • Certain transactions for which you or a related party have contractual protection against disallowance of the tax benefits.

  • Certain transactions resulting in a loss of at least $2 million in any single tax year or $4 million in any combination of tax years. (At least $50,000 for a single tax year if the loss arose from a foreign currency transaction defined in section 988(c)(1), whether or not the loss flows through from an S corporation or partnership.)

  • Certain transactions of interest entered into after November 1, 2006, that are the same or substantially similar to one of the types of transactions that the IRS has identified by published guidance as a transaction of interest.

See the Instructions for Form 8886 for more details.

Capital Construction Fund

Do not claim on Schedule C or C-EZ the deduction for amounts contributed to a capital construction fund set up under chapter 535 of title 46 of the United States Code. Instead, reduce the amount you would otherwise enter on Form 1040, line 43, by the amount of the deduction. Next to line 43, enter “CCF” and the amount of the deduction. For details, see Pub. 595.

Additional Information

See Pub. 334 for more information for small businesses.


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