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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 3. Individual Income Tax Returns (Cont. 5)

3.11.3  Individual Income Tax Returns (Cont. 5)

3.11.3.19 
Schedule E—Supplemental Income and Loss

3.11.3.19.3 
Part II—Income or Loss From Partnerships and S Corporations

3.11.3.19.3.1  (01-01-2008)
Lines 28A Through 28D—Column (e), "At Risk" (Not Transcribed)

  1. Correspond for Form 6198 if it is not attached when both of the following are present: (See Figure 3.11.3–117)

    1. An amount of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is reported in column (f) or column (h), and

    2. The taxpayer checks the corresponding column (e) line, "Check if any amount is not at risk" .

    Figure 3.11.3-117

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.3.19.3.2  (01-01-2008)
Line 32—Total Partnership and S Corporation Income or Loss (Not transcribed)

  1. Compute and enter lines 30 and/or 31 when they are blank and there are entries leading to a total.

  2. Edit or arrow the amount from line 32 to either line 30 or line 31 (See Figure 3.11.3–118) when both lines are blank and there are no entries leading to a total. Edit the line 32 amount to:

    1. Line 30 if the amount on line 32 is positive or,

    2. Line 31 if the amount on line 32 is negative.

    Figure 3.11.3-118

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.3.19.4  (01-01-2008)
Part III—Income or Loss From Estates or Trusts

  1. Part III of Schedule E is used by the taxpayer to report income or loss from estates and trusts.

  2. Compute and enter lines 35 and/or 36 when they are blank and there are entries leading to a total.

  3. Edit or arrow the amount from line 37 to either line 35 or line 36 when both lines are blank. Edit the line 37 amount to:

    1. Line 35 if the amount on line 37 is positive or,

    2. Line 36 if the amount on line 37 is negative.

3.11.3.19.5  (01-01-2008)
Part IV—Income or Loss From Real Estate Mortgage Investment Conduits (REMICs)

  1. Part IV of Schedule E is used by the taxpayer to report income or loss from REMICs.

3.11.3.19.5.1  (01-01-2008)
Line 39—REMIC Income/Loss

  1. Combine line 38 columns (d) and (e) only, and enter the total on line 39 when line 39 is blank and there are entries leading to a total.

3.11.3.19.6  (01-01-2008)
Part V—Summary

  1. Part V of Schedule E is used by the taxpayer to summarize income and losses reported on Schedule E and Form 4835.

3.11.3.19.6.1  (01-01-2008)
Line 40, Net Farm Rental Income or Loss From Form 4835

  1. Take one of the following actions when line 40 is blank and Form 4835 is attached:

    If on Form 4835 Then
    A fractional interest is indicated, •Enter gains on line 30 of Schedule E.
    • Enter losses on line 31 of Schedule E.
    •Do not"X" Form 4835.
    Line 32 is a gain, Enter the line 32 amount on line 40 of Schedule E.
    Line 33c is a loss, Enter the line 33c amount on line 40 of Schedule E*.
    Line 33c blank, Enter the loss from line 32 of Form 4835, to line 40 Schedule E.*

    Exception:

    * If the taxpayer notates "PAL" , do not edit the negative amount to Schedule E, line 40.

  2. Compute the Form 4835 totals when perfecting Schedule E and multiple Forms 4835 are attached.

3.11.3.19.6.2  (01-01-2008)
Line 42—Gross Farming and Fishing Income From Form 4835

  1. Enter a positive amount from line 7 of Form 4835 when:

    1. Line 42 is blank and,

    2. Form 4835 is attached.

    Note:

    Combine the Form 4835 totals when perfecting Schedule E and multiple Forms 4835 are attached.

  2. "X" the amount on line 42 when the amount is negative.

3.11.3.20  (01-01-2008)
Schedule F—Profit or Loss From Farming

  1. The instructions provided in this subsection of the manual are for editing Schedule F. These instructions include:

    • General instructions and editing procedures

    • Combining multiple Schedules F

    • Perfecting the North American Industry Classification System (NAICS) Code

    • Perfecting the Employer Identification Number (EIN)

  2. The following lines on Schedule F are T-Lines and T-COMPUTE lines:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡

3.11.3.20.1  (01-01-2008)
Schedule F, General Instructions

  1. Up to two Schedules F can be processed. Follow the instructions for combining Schedules F in IRM 3.11.3.20.2 when more than two are present.

  2. Enter Sequence Code "14" in the upper-right margin of the first Schedule F if not preprinted. Enter Sequence Code "15" on the second Schedule F.

  3. "X" Schedule F when no money amounts are present.

  4. Take the following actions when the taxpayer indicates that Schedule F income is from a partnership or joint venture by noting a fractional share or percentage of the income:

    1. Include the net fractional amounts on the Schedule E as follows: gains on line 30 and losses on line 31.

    2. Delete the amount from line 18 of Form 1040.

    3. Edit or add the amount to line 17 of Form 1040.

    4. Enter the taxpayer's share of the gross amount from line 11 of the Schedule F to line 42 of Schedule E.

    5. "X" the Schedule F.

  5. If Schedule F is blank, transfer income amounts from an attachment to one of the following sections:

    1. If a beginning or ending inventory is shown, enter the amounts in Part III, Accrual Method Section.

    2. Otherwise, enter the amounts in Part I, Cash Method Section.

  6. Refer to the table below to determine RPC "S" editing.

    If Then
    Line 36 on Schedule F is a gain of $434 or more and Schedule SE is not attached, and;
    • taxpayer indicates that he is not liable for self-employment tax; or
    • Schedule F income is from farm rental only or;
    • Form 4029 or 4361 is attached
    • There is an indication of "Amish" or "Mennonite,"     		Edit RPC "S."

    • Taxpayer shows a gain on a Schedule E, Part ll or on a Schedule C; or
    • There is a Schedule C/C-EZ present without the statutory box marked or;
    • Taxpayer reports self-employment income on line 21 on Form 1040 that is subject to self-employment tax or;
    • The FS is 2 and the spouse has income that is subject to SE tax,     		Do not edit RPC "S" .

3.11.3.20.2  (01-01-2008)
Combining Multiple Schedules F

  1. When the taxpayer submits more than two Schedules F, combine them to a total of two following the instructions in this subsection of the manual.

  2. Combine only the items to be transcribed and "X" those schedules not used.

  3. Use the EIN of the schedule showing the largest gross income. Gross income is found on line 11 of Schedule F.

  4. Use the NAICS Code provided by the taxpayer from the Schedule F being combined with the largest gross income. Gross income is found on line 11 of Schedule F.

  5. Combine only cash method schedules with cash method schedules and combine all accrual method schedules only with other accrual method schedules.

  6. When all schedules use the same method of accounting:

    1. Combine all schedules with gains.

    2. Combine all schedules with losses.

    3. Combine all schedules with the smallest gross income (line 11) when all schedules are either gains or losses.

3.11.3.20.3  (01-01-2008)
Line B—North American Industry Classification System (NAICS) Code

  1. Refer to the following chart for editing the NAICS code.

    If Then
    Missing, incomplete or illegible, Edit from IRS label to Line B, Schedule F.
    More than one, Circle all but the first.
    Combining multiple Schedules F, Edit code from the combined Schedule F with the largest gross income.
    Dummying, Edit if taxpayer has furnished a code.

    Note:

    Delete NAICS if more than 6 digits long.

3.11.3.20.4  (01-01-2008)
Line D—Employer Identification Number

  1. Circle the EIN when it is not nine digits or if it contains letters.

3.11.3.20.5  (01-01-2008)
Line 11—Gross Income

  1. Compute and enter line 11 from lines 1 through 10 when it is blank.

  2. "X" line 11 when an amount is present and both of the following apply. (See Figure 3.11.3–119):

    1. Lines 1 through 10 are blank, and

    2. Line 51 has a significant amount.

    Figure 3.11.3-119

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.3.20.6  (01-01-2008)
Lines 34a through 34f—Other Expenses (Not Transcribed)

  1. Edit the misplaced item(s) to the appropriate T-Line when any transcribed items are included in "Other Expenses" .

    Note:

    Only move amounts when the wording exactly matches the wording on the T-Line.

  2. Enter Unallowable Code "43" and the amount claimed in excess of 48.5 cents per mile when the taxpayer claims a deduction for auto mileage—for trade or business—in excess of 48.5 cents per mile.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " Enter amounts on Form 3471 in dollars and cents.

3.11.3.20.7  (01-01-2008)
Line 35—Total Expenses

  1. Compute and enter line 35 when it is blank. Compute line 35 from lines 12 through 34f.

3.11.3.20.8  (01-01-2008)
Line 37b—"At Risk" Question

  1. Form 6198 must be attached if any Schedule F has a loss of ≡ ≡ ≡ ≡ ≡ or more and the box on 37b is marked. Correspond if missing.

3.11.3.20.9  (01-01-2008)
Line 51 — Gross Income

  1. Reserved.

3.11.3.21  (01-01-2008)
Schedule R—Credit for the Elderly or the Disabled

  1. The instructions provided in this subsection of the manual are for editing Schedule R and Schedule 3. These instructions include:

    • General editing procedures

    • Perfecting the filing status and age boxes

    • Perfecting taxable disability income amounts

    • Computing nontaxable pension, annuity, or disability income

  2. The following lines are T-Lines and T-compute lines:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.11.3.21.1  (01-01-2008)
Schedule R, General Information

  1. Edit Sequence Code "16" in the upper-right margin of Schedule R if it is not preprinted, or if the taxpayer uses Schedule 3 from Form 1040A instead of a Schedule R. It is not necessary to enter or delete the sequence code when attached to Form 1040A.

    Note:

    References will only be made to the Schedule R but will apply to the Schedule 3 as well.

  2. Only one Schedule R may be processed. If more than one Schedule R is attached, process the first Schedule R and "X" the remaining Schedule(s) R.

  3. Do not correspond for missing information when line 43 of Form 1040 (line 27, Form 1040A) is (or can be determined to be) zero or a negative amount. Instead, "X" the schedule.

  4. Do not "X" Schedule R when the only entries present are in Part I.

3.11.3.21.2  (01-01-2008)
Filing Status and Age Box

  1. No action is necessary when the taxpayer has marked more than one box.

  2. Correspond when all of the boxes are blank.

3.11.3.21.3  (01-01-2008)
Line 11—Taxable Disability Income

  1. Line 11 must have an entry if the taxpayer has marked box 2, 4, 5, 6, or 9 in Part I. When line 11 is blank, take the following actions:

    1. If box 2, 4, 5, or 9 in Part I has been marked, enter the taxable amount of disability income from Form 1040/A or an attachment.

    2. If box 6 in Part I has been marked, enter the taxable amount of disability income from Form 1040 plus $5,000.

    3. If the amount cannot be determined, correspond.

3.11.3.21.4  (01-01-2008)
Line 13c—Nontaxable Pension, Annuity, or Disability Income

  1. Compute and enter line 13c when it is blank.

  2. Compute line 13c from lines 13a and 13b, or from an attachment.

  3. Correspond for the amount of nontaxable pension, annuity, or disability income when you are unable to compute line 13c by subtracting the taxable income from the gross income.

    Exception:

    Do not correspond if you can determine that line 13c would be zero or negative (e.g., when lines 17 and 18 are equal).

3.11.3.22  (01-01-2008)
Schedule SE—Short and Long Self-Employment Tax

  1. The instructions provided in this subsection of the manual are for editing Schedule SE. These instructions include:

    • Editing procedures for the long and short versions

    • Sequencing and combining multiple Schedules SE

    • Perfecting the Taxpayer Identification Number (TIN)

    • Editing the SE Method Code

  2. The following lines on the Schedule SE are T-Lines and T-COMPUTE lines:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.11.3.22.1  (01-01-2008)
Schedule SE, General Procedures

  1. Only two Schedules SE can be processed. One Schedule SE for each of:

    • The primary taxpayer

    • The secondary taxpayer

  2. The Sequence Code is edited in the upper-right corner of either page 1 or 2. Edit the Sequence Code on the page used by the taxpayer.

    • Taxpayers using Section A—the "short" version of Schedule SE—will enter information on page 1 of the Schedule SE.

    • Taxpayers using Section B—the "long" version of Schedule SE—will enter information on page 2 of the Schedule SE.

    Note:

    Delete Section A of the Schedule SE when a taxpayer completes both Sections A and B, reporting the same self-employment income. Edit sequence code on page 2, if not already present.

  3. If only one processable Schedule SE is present, enter Sequence Code "17" if not preprinted.

  4. If two processable Schedules SE are present—one for the primary taxpayer and one for the secondary taxpayer—edit the Sequence Code as follows:

    1. Enter "17" if not preprinted, for the primary taxpayer.

    2. Enter "18" if not preprinted, for the secondary taxpayer.

  5. Combine multiple Schedules SE when there is more than one Schedule SE for any one taxpayer. Delete those schedules not used.

  6. Take one of the following actions when one Schedule SE was submitted for two taxpayers:

    1. Allocate each taxpayer's Schedule SE amounts to two separate dummy Schedules SE. "X" the Schedule SE with the combined taxpayer liability.

    2. Correspond for the correct allocation when it cannot be determined.

  7. Edit RPC "S" and delete Schedule SE when the only income on Schedule SE is from ministerial duties and any of the following conditions are present:

    1. The taxpayer indicates that s/he is not liable for self-employment tax.

    2. The taxpayer indicates that Form 4029 or 4361 has been filed.

    Exception:

    Do not edit RPC "S" if the FS is "2" and the spouse is liable for SE tax.

  8. "X" the EIC amount on line 66a of Form 1040 and edit RPC "B" when EIC is claimed and there is a clear indication that an exemption from SE tax was given on an approved Form 4029 or Form 4361. Delete the amount when Form 4029 or Form 4361 is attached or a notation of "Exempt / Notary," "Amish," or "Mennonite" is present.

3.11.3.22.2  (01-01-2008)
Short Schedule SE Instructions (Section A)

  1. Use the instructions in this subsection of the manual when the taxpayer completes Section A of Schedule SE.

    Exception:

    Use the instructions for the long Schedule SE in IRM 3.11.3.22.3—and process the long Schedule SE—when the taxpayer completes both Section A and Section B of Schedule SE.

3.11.3.22.2.1  (01-01-2008)
Social Security Number

  1. Edit the TIN from the caption on Form 1040 when the TIN is missing, illegible, or other than nine digits. If the TIN is not present in the caption, search Form(s) W–2 and other attachments for the missing TIN.

    Note:

    Also edit the missing TIN to the caption. See IRM 3.11.3.9.2 for instructions on perfecting the caption.

  2. Use the caption to determine the correct TIN when there are two TINs but only one name in Section A. Circle the TIN which does not match the taxpayer's name.

  3. Correspond for a TIN if it cannot be perfected or obtained via research.

3.11.3.22.2.2  (01-01-2008)
Lines 1 and 2—Income

  1. Perfect lines 1 and 2 when they are both blank. Perfect them as follows:

    If the income is from Then
    Line 21 of Form 1040, and line 3 includes income from line 21, Include the amount on line 2.
    Schedule C/C–EZ, Enter the net profit/loss from Schedule C/C–EZ on line 2.
    Schedule E non-farm partnership, Enter the net profit/loss for a non-farm partnership from Schedule E on line 2.
    Schedule E farm partnership, Enter the net profit/loss for a farm partnership from Schedule E on line 1.
    Schedule F, Enter the net profit/loss from Schedule(s) F on line 1.

  2. If a taxpayer claims SE income that does not meet the criteria in (1) above, include the amount on line 2.

3.11.3.22.2.3  (01-01-2008)
Line 3—Net Earnings/Loss

  1. Compute and enter line 3 when it is blank and there are amounts present which lead to a total. (See Figure 3.11.3–120.)

  2. Divide the amount on line 4 by .9235 and enter the result on line 3 when all of the following conditions are present:

    • Line 4 has an entry, and

    • Lines 1, 2, and 3 are blank, and

    • Line 3 cannot be determined from attachments.

  3. "X" the Short version of Schedule SE when the amount on line 3 is a negative amount or it is less than $434.

  4. Adjust the line 2 amount to exclude "Exempt/Notary" income when the taxpayer has:

    1. Written "Exempt/Notary" and an amount to the left of line 3 and,

    2. Subtracted that amount from the total of lines 1 and 2, Schedule SE.

    Figure 3.11.3-120

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.3.22.2.4  (01-01-2008)
Line 4—Margin SE Quarters Covered

  1. Refer to the short period instructions in IRM 3.11.3.7.2.16 when Schedule SE is attached to a short period return. A code representing the number of quarters covered by a short period return is edited in the margin to the right of line 4.

3.11.3.22.3  (01-01-2008)
Long Schedule SE Instructions (Section B)

  1. Use the instructions in this subsection of the Schedule SE instructions when the taxpayer completes Section B—or both Section A and Section B—of Schedule SE.

3.11.3.22.3.1  (01-01-2008)
Social Security Number

  1. Edit the TIN from the caption on Form 1040 when the TIN is missing, illegible, or other than nine digits. If the TIN is not present in the caption, search Form(s) W–2 and other attachments for the missing TIN. (See Figure 3.11.3-122.)

    Note:

    Also edit the missing TIN to the caption. See IRM 3.11.3.9.2 for instructions on perfecting the caption.

  2. Use the caption to determine the correct TIN when there are two TINs but only one name in Section B. Circle the TIN which does not match the taxpayer's name.

  3. Correspond for a missing TIN if it cannot be perfected or obtained through research.

3.11.3.22.3.2  (01-01-2008)
Lines 1 and 2—Income

  1. Perfect lines 1 and 2 when they are both blank. Perfect them as follows:

    1. Enter net profit/loss from Schedule(s) F on line 1.

    2. Enter net profit/loss for farm partnership from Schedule E on line 1.

    3. Enter net profit/loss from Schedule C/C–EZ on line 2.

    4. Enter net profit/loss for non-farm partnership from Schedule E on line 2.

    5. If line 3, Schedule SE includes income from line 21, Form 1040, include the amount on line 2.

    Exception:

    Do not compute an income amount or perfect lines 1 and 2 when the taxpayer has used the optional method in Part II to figure his/her net earnings. (See Figure 3.11.3–123)

3.11.3.22.3.3  (01-01-2008)
Line 3—Net Earnings/Loss

  1. Compute and enter line 3 when it is blank and there are amounts present which lead to a total.

  2. Divide the amount on line 4a by .9235 and enter the result on line 3 (See Figure 3.11.3–121) when all of the following conditions are present:

    • Line 4a has an entry, and

    • Lines 1, 2, and 3 are blank, and

    • Line 3 cannot be determined from attachments

  3. Edit the amount on line 4b to line 3 when both of the following conditions are present (See Figure 3.11.3–123):

    • Line 4b has a significant entry, and

    • Lines 1, 2, 3, and 4a are blank, negative, zero, or a dash

  4. "X" Section B when the amount on line 3 is a negative amount or it is less than $434.

    Exception:

    Do not "X" Section B when line 5a has an entry of ≡ ≡ or more.

  5. Adjust the line 2 amount to exclude any income identified as "Exempt/Notary" income when the taxpayer has:

    1. Written "Exempt/Notary" and an amount to the left of line 3 and,

    2. Subtracted that amount from the total of lines 1 and 2.

    Figure 3.11.3-121
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.3.22.3.4  (01-01-2008)
Line 4c—Margin SE Quarters Covered

  1. Refer to the short period return instructions in IRM 3.11.3.7.2.16 when Schedule SE is attached to a short period return. A code representing the number of quarters covered by a short period return is edited in the margin to the right of line 4c.

3.11.3.22.3.5  (01-01-2008)
Line 5a—Church Employee Self-Employment Wages

  1. Process Section B regardless of the line 3 amount when line 5a has an entry of $109 or more.

  2. Divide the amount on line 5b by .9235 and enter the result on line 5a when both of the following conditions are present:

    • Line 5a is blank, and

    • Line 5b has an entry.

3.11.3.22.3.6  (01-01-2008)
Line 8d—Total Social Security Wages and Tips

  1. When the amount on line 8d is more than $97,500 and lines 8b and 8c are blank, add the SE taxpayer's Form(s) W-2 Social Security wages and tips subject to Social Security tax withholding.

    If lines 8b and 8c are blank and Then
    The total of all Social Security wages and tips on Forms W–2 is $97,500 or less, Edit the total income on line 8d.
    There is no Form W–2 income, and

    Line 8a is also blank.     		"X" line 8d.

  2. Take no action when the amount on line 8d is more than $97,500 and lines 8b and 8c contains significant entries.

  3. Compute and enter line 8d when it is blank and one of the following conditions is present:

    1. There are entries leading to an amount, or

    2. The taxpayer has Form W–2 wages and/or tips subject to Social Security Tax withholding.

    Note:

    Only enter the amount from the "Social Security Wages" box, and/or "Social Security Tips" box if there is also an amount in the box for "Social Security Tax Withheld" . (See Figure 3.11.3–122.)

    Figure 3.11.3-122
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.3.22.3.7  (01-01-2008)
Bottom Center Margin—SE Method Code

  1. The SE Method Code is entered in the bottom-center margin of Section B.

  2. Enter SE Method Code "1" when both of the following conditions are present:

    1. Line 15 is blank or zero, and

    2. The significant entries on lines 4b and 17 are the same.

  3. Enter SE Method Code "2" . (See Figure 3.11.3–123) when both of the following conditions are present:

    1. There are any significant entries on lines 15 or 17 and

    2. SE Method Code "1" has not been assigned.

  4. DO NOT code the SE Method Code when it can be determined that the entries on lines 15 or 17 are misplaced.

    Figure 3.11.3-123
    This image is too large to be displayed in the current screen.