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Profit or Loss From Business


Introduction

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 certain qualified joint ventures, and (c) certain income shown on Form 1099-MISC, Miscellaneous Income. See the Instructions for Recipient (back of Copy B of Form 1099-MISC) for the types of income to report on Schedule C.

Small 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 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.

Future Developments

For the latest information about developments related to Schedule C and its instructions, such as legislation enacted after they were published, go to IRS.gov/schedulec.

What's New

Standard mileage rate.   The business standard mileage rate for 2016 is 54 cents per mile.

Change to Line D instructions.   If you conducted your trade or business as a single-member limited liability company (LLC), use the EIN issued to the LLC (in the LLC's legal name) for a qualified retirement plan, to file employment excise, alcohol, tobacco, or firearms returns, or as a payer of gambling winnings. Do not use the EIN issued to you in your name as a sole proprietor of the trade or business.

Live theatrical production costs.   You may elect to expense certain costs of qualified live theatrical productions commencing in 2016. For more information, see Film and television and live theatrical production expenses, later.

Sharing Economy Tax Center.    The sharing (or on-demand, gig, or access) economy refers to an emerging area of activity that involves people using technology advancements to arrange transactions that generate revenue from sharing assets or providing services upon request. Visit IRS.gov/sharing to get more information about the tax consequences of participating in the sharing economy.

Reminders

Small Business and Self-Employed (SB/SE) Tax Center.    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 taxpayers with assets under $10 million. For additional information, visit the Small Business and Self-Employed Tax Center at IRS.gov/businesses/small.


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