2010 Instructions for Schedule C Profit or Loss From Business

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1 Department of the Treasury Internal Revenue Service 2010 Instructions for Schedule C 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 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 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. Section references are to the Internal property no longer includes cellular phones property, or to report information on listed Revenue Code unless otherwise noted. and similar telecommunications. property. Form 4684 to report a casualty or theft Excess farm losses. If your Schedule C ac- gain or loss involving property used in your tivity includes processing a farm commod- trade or business or income-producing What s New ity, any losses you have from that activity property. Increase in section 179 expense. You may may be reduced or eliminated. See page Form 4797 to report sales, exchanges, now deduct up to $500,000 of the cost of C-7 and the Instructions for Schedule F for and involuntary conversions (not from a section 179 property placed in service in more details. casualty or theft) of trade or business prop- erty This deduction is phased out if the New credit for small employer health cost of the property exceeds $2,000,000. Form 6198 to figure your allowable insurance premiums. If your line 14 ex- The cost of certain qualified real property loss if you have a business loss and you penses include the cost of providing health have amounts invested in the business for placed in service in 2010 may also be de- insurance coverage to your employees, you which you are not at risk. ducted but is limited to $250,000. For more must reduce your expenses by the amount details, see Pub Form 8582 to figure your deductible of any credit determined on Form loss from passive activities. See page C-5 and Form 8941 and its in- Extension of special allowance. The spestructions. Form 8594 to report certain purchases cial first-year depreciation allowance has or sales of groups of assets that constitute a been extended to property placed in service trade or business. in See Pub. 946 for details on which Form 8824 to report like-kind ex- property is eligible for the special allow- changes. ance. General Instructions Form 8829 to claim expenses for busi- ness use of your home. Increased deduction for start-up costs. If Other Schedules and Forms Form 8903 to take a deduction for inyour business began in 2010, you can de- You May Have To File come from domestic production activities. duct up to $5,000 of certain business Schedule A to deduct interest, taxes, Single-member limited liability company start-up costs paid or incurred after October and casualty losses not related to your busi- (LLC). Generally, a single-member do- 22, 2004, in tax years before 2010, and up ness. mestic LLC is not treated as a separate ento $10,000 of certain business start-up costs Schedule E to report rental real estate tity for federal income tax purposes. If you paid or incurred in See page C-9 for and royalty income or (loss) that is not submore details. ject to self-employment tax. file Schedule C or C-EZ (or Schedule E or are the sole member of a domestic LLC, Schedule F to report profit or (loss) F, if applicable). However, you can elect to Standard mileage rate. The business stanfrom farming. treat a domestic LLC as a corporation. See dard mileage rate for 2010 decreased to 50 Form 8832 for details on the election and cents per mile. See the instructions for line Schedule J to figure your tax by aver- the tax treatment of a foreign LLC. 9 beginning on page C-4 for more details. aging your farming or fishing income over the previous 3 years. Doing so may reduce Single member limited liability your tax. companies (LLCs) with employees. Reportable transaction penalties limited. Schedule SE to pay self-employment Single-member LLCs that are disregarded The penalties for failure to disclose a retax on income from any trade or business. as entities separate from their owner for portable transaction have changed. See the federal income tax purposes are now re- Instructions for Form 8886 for more de- Form 3800 to claim any of the general quired to file employment tax returns using tails. business credits. the LLC s name and employer identifica- Form 4562 to claim depreciation (in- tion number (EIN) rather than the LLC Removal of cellular phones and similar cluding the special allowance) on assets owner s name and EIN. Single-member telecommunications equipment from listed placed in service in 2010, to claim amorti- LLCs not previously needing an EIN may property. Beginning in taxable years be- zation that began in 2010, to make an elec- now need to obtain an EIN for the payment ginning after December 31, 2009, listed tion under section 179 to expense certain and reporting of these taxes. For more in- C-1 Cat. No W

2 formation, see the Instructions for Form tion will be necessary for any future year in Reportable Transaction SS-4. which the spouses meet the requirements to Disclosure Statement be treated as a qualified joint venture. Heavy highway vehicle use tax. If you use Use Form 8886 to disclose information for certain highway trucks, truck-trailers, The election generally does not require each reportable transaction in which you tractor-trailers, or buses in your trade or that you and your spouse obtain an embusiness, you may have to pay a federal ployer identification number (EIN) since each tax year that your federal income tax participated. Form 8886 must be filed for highway motor vehicle use tax. See the In- you and your spouse will file as sole propristructions for Form 2290 to find out if you etors. However, you may need an EIN to the transaction. You may have to pay a pen- liability is affected by your participation in must pay this tax. file other returns such as employment or alty if you are required to file Form 8886 Information returns. You may have to file excise tax returns. To apply for an EIN, see but do not do so. You may also have to pay information returns for wages paid to emtransaction understatements. The following the Instructions for Form SS-4. interest and penalties on any reportable ployees, certain payments of fees and other nonemployee compensation, interest, rents, For more information on qualified joint are reportable transactions. royalties, real estate transactions, annuities, ventures, go to IRS.gov. Enter QJV elec- Any listed transaction that is the same and pensions. You may also have to file an tion, in the search box and select Benefits as or substantially similar to tax avoidance information return if you sold $5,000 or of Qualified Joint Ventures for Family transactions identified by the IRS. more of consumer products to a person on a Businesses. Any transaction offered to you or a rebuy-sell, deposit-commission, or other sim- lated party under conditions of confidentiilar basis for resale. For details, see the Rental real estate business. If you and ality for which you paid an advisor a fee of 2010 General Instructions for Certain In- your spouse make the election for your at least $50,000. formation Returns (Forms 1098, 1099, rental real estate business, you must each report your share of income and deductions Certain transactions for which you or 3921, 3922, 5498, and W-2G). on Schedule C or C-EZ instead of Schedule a related party have contractual protection If you received cash of more than E. Rental real estate income generally is not against disallowance of the tax benefits. $10,000 in one or more related transactions included in net earnings from self-employin your trade or business, you may have to ment subject to self-employment tax and of at least $2 million in any single tax year Certain transactions resulting in a loss file Form For details, see Pub generally is subject to the passive loss limiyears. (At least $50,000 for a single tax or $4 million in any combination of tax tation rules. Electing qualified joint venture Husband-Wife status and using the Schedule C or C-EZ year if the loss arose from a foreign cur- Qualified Joint Venture does not alter the application of the rency transaction defined in section If you and your spouse each materially parthrough from an S corporation or partner- self-employment tax or the passive loss 988(c)(1), whether or not the loss flows ticipate (see Material participation on page limitation rules. C-3) as the only members of a jointly ship.) owned and operated business and you file a If you and your spouse have a rental Certain transactions of interest en- joint return for the tax year, you can make real estate business not otherwise subject to tered into after November 1, 2006, that are an election to be taxed as a qualified joint self-employment tax and no other income the same or substantially similar to one of venture instead of a partnership. This eleccheck the box on Schedule C, line 1. In that identified by published guidance as a trans- subject to self-employment, you each must the types of transactions that the IRS has tion, in most cases, will not increase the tocase, you and your spouse each should not action of interest. tal tax owed on the joint return, but it does give each of you credit for social security file Schedule SE. However, if there are other net earnings from self-employment of See the Instructions for Form 8886 for earnings on which retirement benefits are $400 or more, the spouse(s) with the other more details. based and for Medicare coverage. By maknet earnings from self-employment should ing the election, you will not be required to file Schedule SE without including the Capital Construction Fund file Form 1065 for any year the election is in effect and will instead report the income amount of net profit from rental real estate Do not claim on Schedule C or C-EZ the and deductions directly on your joint reline 2. In that case, do not check the box on ital construction fund set up under chapter business from Schedule C on Schedule SE, deduction for amounts contributed to a cap- turn. If you and your spouse filed a Form 1065 for the year prior to the election, the line 1 of Schedule C. 535 of title 46 of the United States Code. partnership terminates at the end of the tax Instead, reduce the amount you would oth- year immediately preceding the year the Exception Community Income erwise enter on Form 1040, line 43, by the election takes effect. If you and your spouse wholly own an unenter CCF and the amount of the deduc- amount of the deduction. Next to line 43, incorporated business as community proption. For details, see Pub. Note. Mere joint ownership of property erty under the community property laws of 595. that is not a trade or business does not qual- a state, foreign country, or U.S. possession, Additional Information ify for the election. the income and deductions are reported as follows. See Pub. 334 for more information for Making the election. To make this elec- If only one spouse participates in the small businesses. tion, you must divide all items of income, gain, loss, deduction, and credit attributable business, all of the income from that busi- to the business between you and your ness is the self-employment earnings of the spouse in accordance with your respective spouse who carried on the business. Specific Instructions interests in the venture. Each of you must If both spouses participate, the income file a separate Schedule C, C-EZ, or F. On and deductions are allocated to the spouses Filers of Form each line of your separate Schedule C, based on their distributive shares. Do not complete the C-EZ, or F, you must enter your share of block labeled Social security number If either or both you and your spouse the applicable income, deduction, or loss. (SSN). Instead, enter the employer identi- are partners in a partnership, see Pub Each of you must also file a separate fication number (EIN) issued to the estate Schedule SE to pay self-employment tax, If you and your spouse elected to treat or trust on line D. as applicable. the business as a qualifying joint venture, see Husband-Wife Qualified Joint Venture Once made, the election can be revoked on this page. only with the permission of the IRS. However, the election technically remains in ef- The only states with community prop- Describe the business or professional activ- Line A fect only for as long as the spouses filing as erty laws are Arizona, California, Idaho, ity that provided your principal source of a qualified joint venture continue to meet Louisiana, Nevada, New Mexico, Texas, income reported on line 1. If you owned the requirements for filing the election. If Washington, and Wisconsin. A change in more than one business, you must complete the spouses fail to meet the qualified joint your reporting position will be treated as a a separate Schedule C for each business. venture requirements for a year, a new elec- conversion of the entity. Give the general field or activity and the C-2

3 type of product or service. If your general only in part for the year of the payment. See Work you did as an investor in an activchapter 1 of Pub ity is not treated as participation unless you field or activity is wholesale or retail trade, or connected with production serv- were directly involved in the day-to-day ices (mining, construction, or manufacturcome when you earn it and deduct expenses Work done as an investor includes: If you use the accrual method, report in- management or operations of the activity. ing), also give the type of customer or client. For example, wholesale sale of when you incur them even if you do not pay them during the tax year. Accrual-basis Studying and reviewing financial hardware to retailers or appraisal of real taxpayers are put on a cash basis for deestate for lending institutions. statements or reports on the activity, ducting business expenses owed to a reanalyses of the finances or operations of the Preparing or compiling summaries or lated cash-basis taxpayer. Other rules determine the timing of deductions based activity for your own use, and Line D on economic performance. See Pub Monitoring the finances or operations Enter on line D the employer identification of the activity in a nonmanagerial capacity. To change your accounting method, you number (EIN) that was issued to you on generally must file Form You may Participation by your spouse during the Form SS-4. Do not enter your SSN. Do not also have to make an adjustment to prevent tax year in an activity you own can be enter another taxpayer s EIN (for example, amounts of income or expense from being counted as your participation in the activfrom any Forms 1099-MISC that you re- duplicated or omitted. This is called a sec- ity. This rule applies even if your spouse ceived). If you do not have an EIN, leave tion 481(a) adjustment. did not own an interest in the activity and line D blank. Example. You change to the cash whether or not you and your spouse file a You need an EIN only if you have a method of accounting and choose to ac- joint return. However, this rule does not ap- qualified retirement plan or are required to count for inventoriable items in the same ply for purposes of determining whether file employment, excise, alcohol, tobacco, manner as materials and supplies that are you and your spouse can elect to have your or firearms returns, or are a payer of gaminstead of a partnership (see Husband-Wife not incidental. You accrued sales in 2009 business treated as a qualified joint venture bling winnings. If you need an EIN, see the for which you received payment in Instructions for Form SS-4. You must report those sales in both years as Qualified Joint Venture on page C-2 ). a result of changing your accounting For purposes of the passive activity Single member LLCs. If you are the sole method and must make a section 481(a) ad- rules, you materially participated in the opjustment to prevent duplication of income. eration of this trade or business activity owner of an LLC that is not treated as a separate entity for federal income tax pur- A net negative section 481(a) adjustposes, you may have an EIN that was is- during 2010 if you met any of the following ment is taken into account entirely in the seven tests. sued to the LLC (and in the LLC s legal name) if you are required to file employ- year of the change. A net positive section 1. You participated in the activity for ment tax returns and certain excise tax reaccount over a period of 4 years. Include 481(a) adjustment is generally taken into more than 500 hours during the tax year. turns. However, you should enter on line 2. Your participation in the activity for D only the EIN issued to you and in your any net positive section 481(a) adjustments the tax year was substantially all of the paron line 6. If the net section 481(a) adjustname as a sole proprietor. If you do not ticipation in the activity of all individuals have such an EIN, leave line D blank. Do ment is negative, report it in Part V. (including individuals who did not own any not enter on line D the EIN issued to the For details on figuring section 481(a) interest in the activity) for the tax year. LLC. adjustments, see the Instructions for Form 3. You participated in the activity for 3115, and Rev. Proc , more than 100 hours during the tax year, I.R.B. 310, available at and you participated at least as much as any Line E other person for the tax year. This includes Also see Rev. Proc , individuals who did not own any interest in Enter your business address. Show a street I.R.B. 499, available at the activity. address instead of a box number. Include 4. The activity is a significant particithe suite or room number, if any. If you pation activity for the tax year, and you parconducted the business from your home lo- ticipated in all significant participation cated at the address shown on Form 1040, Line G activities for more than 500 hours during page 1, you do not have to complete this the year. An activity is a significant parline. If your business activity was not a rental ticipation activity if it involves the conactivity and you met any of the material duct of a trade or business, you participated participation tests, explained next, or the in the activity for more than 100 hours durexception for oil and gas applies (explained ing the tax year, and you did not materially Line F later on page 4), check the Yes box. Oth- participate under any of the material par- Generally, you can use the cash method, erwise, check the No box. If you check ticipation tests (other than this test 4). accrual method, or any other method per- the No box, this business is a passive ac- 5. You materially participated in the activity. If you have a loss from this business, tivity for any 5 of the prior 10 tax years. mitted by the Internal Revenue Code. In all cases, the method used must clearly reflect see Limit on losses on page 4. If you have a income. Unless you are a qualifying taxtivity in which you materially participated profit from this business activity but have 6. The activity is a personal service acpayer or a qualifying small business taxfor any 3 prior tax years. A personal service current year losses from other passive ac- payer (see the Part III instructions on page tivities or you have prior year unallowed C-8), you must use the accrual method for passive activity losses, see the Instructions activity is an activity that involves perform- sales and purchases of inventory items. for Form ing personal in the fields of health, Special rules apply to long-term contracts law, engineering, architecture, accounting, (see section 460 for details). Material participation. For purposes of actuarial science, performing arts, consultthe seven material participation tests listed ing, or any other trade or business in which If you use the cash method, show all below, participation generally includes any capital is not a material income-producing items of taxable income actually or con- work you did in connection with an activity factor. structively received during the year (in if you owned an interest in the activity at 7. Based on all the facts and circumcash, property, or ). Income is con- the time you did the work. The capacity in stances, you participated in the activity on a structively received when it is credited to which you did the work does not matter. regular, continuous, and substantial basis your account or set aside for you to use. However, work is not treated as partici- for more than 100 hours during the tax Also, show amounts actually paid during pation if it is work that an owner would not year. Your participation in managing the the year for deductible expenses. However, customarily do in the same type of activity activity does not count in determining if if the payment of an expenditure creates an and one of your main reasons for doing the you meet this test if any person (except asset having a useful life that extends sub- work was to avoid the disallowance of you) (a) received compensation for perstantially beyond the close of the year, it losses or credits from the activity under the forming management in connecmay not be deductible or may be deductible passive activity rules. tion with the activity, or (b) spent more C-3

4 hours during the tax year than you spent include any recapture of the deduction for performing management in con- Line 1 clean-fuel vehicles and clean-fuel vehicle nection with the activity (regardless of Enter gross receipts from your trade or refueling property used in your business. whether the person was compensated for business. Include amounts you received in See Regulations section 1.179A-1 for de- the ). your trade or business that were properly tails. shown on Forms 1099-MISC. If the total Rental of property. Generally, a rental ac- amounts that were reported in box 7 of If the business use percentage of any tivity (such as long-term equipment leasing Forms 1099-MISC are more than the total listed property (defined in the instructions or rental real estate) is a passive activity you are reporting on line 1, attach a statereport on this line any recapture of excess for line 13) dropped to 50% or less in 2010, even if you materially participated in the ment explaining the difference. activity. However, if you materially participense deduction. Use Part IV of Form 4797 depreciation, including any section 179 ex- pated in a rental real estate activity as a real Statutory employees. If you received a estate professional, it is not a passive activuse percentage drops to 50% or less on Form W-2 and the Statutory employee to figure the recapture. Also, if the business ity. Also, if you met any of the five excepleased listed property (other than a vehi- box in box 13 of that form was checked, tions listed under Rental Activities in the report your income and expenses related to Instructions for Form 8582, the rental of the that income on Schedule C or C-EZ. Enter cle), include on this line any inclusion property is not treated as a rental activity your statutory employee income from box amount. See chapter 5 of Pub. 946 to figure and the material participation rules above 1 of Form W-2 on line 1 of Schedule C or the amount. apply. See Activities That Are Not Passive C-EZ and check the box on that line. Social Activities in the Instructions for Form 8582 security and Medicare tax should have been for the definition of a real estate profesyou do not owe self-employment tax on Part II. Expenses withheld from your earnings; as a result, sional. these earnings. Statutory employees in- Exception for oil and gas. If you are filing clude full-time life insurance agents, cer- Capitalizing costs of property. If you pro- Schedule C to report income and deducacquired property for resale, certain ex- tain agent or commission drivers and duced real or tangible personal property or tions from an oil or gas well in which you traveling salespersons, and certain home- own a working interest directly or through workers. penses attributable to the property gener- an entity that does not limit your liability, ally must be included in inventory costs or If you had both self-employment incheck the Yes box. The activity of owncome and statutory employee income, you capitalized. In addition to direct costs, pro- ing a working interest is not a passive activmust file two Schedules C. You cannot use ducers of inventory property generally ity, regardless of your participation. must also include part of certain indirect Schedule C-EZ or combine these amounts costs in their inventory. Purchasers of peron a single Schedule C. sonal property acquired for resale must in- Limit on losses. Your loss may be limited if: Qualified joint ventures reporting only clude part of certain indirect costs in You checked the No box on line G, rental real estate income. See the instrucreceipts for the 3 prior tax years exceed $10 inventory only if the average annual gross or tions under Rental real estate business on You are a qualified joint venture rethe indirect costs that benefit real or tangi- page C-2. million. Also, you must capitalize part of porting only rental real estate income, but not as a real estate professional. In these Installment sales. Generally, the install- ble personal property constructed for use in situations you may have a loss from a pascome from the sale of (a) personal property erty produced for sale to customers. Re- ment method cannot be used to report in- a trade or business, or noninventory propsive activity, and you may have to use Form 8582 to figure your allowable loss, if regularly sold under the installment duce the amounts on lines 8 through 26 and any, to enter on Schedule C, line 31. method, or (b) real property held for resale Part V by amounts capitalized. See Pub. to customers. But the installment method 538 for a discussion of uniform capitalizacan be used to report income from sales of tion rules. Generally, you can deduct losses from passive activities only to the extent of in- certain residential lots and timeshares if come from passive activities. For details, you elect to pay interest on the tax due on Exception for certain producers. Prosee Pub that income after the year of sale. See sec- ducers who account for inventoriable items tion 453(l)(2)(B) for details. If you make in the same manner as materials and sup- this election, include the interest in the total plies that are not incidental can currently on Form 1040, line 60. Also, enter deduct expenditures for direct labor and all Line H 453(l)(3) and the amount of the interest indirect costs that would otherwise be in- If you started or acquired this business in on the dotted line to the left of line 60. cluded in inventory costs. See Part III. Cost 2010, check the box on line H. Also check of Goods Sold on page C-8 for more de- If you use the installment method, atthe box if you are reopening or restarting tails. tach a schedule to your return. Show sepathis business after temporarily closing it, rately for 2010 and the 3 preceding years: Exception for creative property. If you and you did not file a 2009 Schedule C or gross sales, cost of goods sold, gross profit, are a freelance artist, author, or photogra- C-EZ for this business. percentage of gross profit to gross sales, pher, you may be exempt from the capitali- amounts collected, and gross profit on zation rules. However, your personal amounts collected. efforts must have created (or reasonably be expected to create) the property. This exception does not apply to any expense re- Part I. Income lated to printing, photographic plates, Except as otherwise provided in the Inter- Line 6 motion picture films, video tapes, or similar nal Revenue Code, gross income includes Report on line 6 amounts from finance reincome from whatever source derived. In items. These expenses are subject to the serve income, scrap sales, bad debts you capitalization rules. For details, see Uni- certain circumstances, however, gross inrecovered, interest (such as on notes and form Capitalization Rules in Pub come does not include extraterritorial inaccounts receivable), state gasoline or fuel come that is qualifying foreign trade income. Use Form 8873 to figure the extrabiodiesel and renewable diesel fuels tax refunds you received in 2010, credit for territorial income exclusion. Report it on Line 9 Schedule C as explained in the Instructions claimed on line 8 of Form 8864, credit for for Form alcohol and cellulosic biofuel fuels claimed You can deduct the actual expenses of op- on line 7 of Form 6478, credit for federal erating your car or truck or take the stan- If you were a debtor in a chapter 11 tax paid on fuels claimed on your 2009 dard mileage rate. You must use actual bankruptcy case during 2010, see Chapter Form 1040, prizes and awards related to expenses if you used your vehicle for hire 11 Bankruptcy Cases under Income in the your trade or business, and other kinds of (such as a taxicab) or you used five or more instructions for Form 1040 and page SE-2 miscellaneous business income. Include vehicles simultaneously in your business of the instructions for Schedule SE (Form amounts you received in your trade or busi- (such as in fleet operations). You cannot 1040). ness as shown on Form 1099-PATR. Also, use actual expenses for a leased vehicle if C-4

5 you previously used the standard mileage pendent care assistance programs. If you rate for that vehicle. Line 13 made contributions on your behalf as a Depreciation and section 179 expense de- self-employed person to a dependent care You can take the standard mileage rate duction. Depreciation is the annual deducfor 2010 only if you: assistance program, complete Form 2441, tion allowed to recover the cost or other Parts I and III, to figure your deductible Owned the vehicle and used the stan- basis of business or investment property contributions to that program. dard mileage rate for the first year you having a useful life substantially beyond placed the vehicle in service, or You cannot deduct contributions you the tax year. You can also depreciate im- made on your behalf as a self-employed Leased the vehicle and are using the provements made to leased business prop- person for group-term life insurance. standard mileage rate for the entire lease erty. However, stock in trade, inventories, period (except the period, if any, before and land are not depreciable. Depreciation Do not include on line 14 any contribu- 1998). starts when you first use the property in tions you made on your behalf as a self-emyour business or for the production of inployed person to an accident and health If you take the standard mileage rate: come. It ends when you take the property plan. However, you may be able to deduct out of service, deduct all your depreciable on Form 1040, line 29, or Form 1040NR, Multiply the number of business miles cost or other basis, or no longer use the line 29, the amount you paid for health driven by 50 cents, and property in your business or for the producspouse, and dependents, even if you do not insurance on behalf of yourself, your Add to this amount your parking fees tion of income. You can also elect under and tolls, and enter the total on line 9. section 179 to expense part or all of the cost itemize your deductions. See the instruc- of certain property you bought in 2010 for tions for Form 1040, line 29, or Form Do not deduct depreciation, rent or lease use in your business. See the Instructions 1040NR, line 29, for details. payments, or your actual operating expenses. for Form 4562 and Pub. 946 to figure the You must reduce your line 14 deduction amount to enter on line 13. by the amount of any credit for small em- If you deduct actual expenses: ployer health insurance premiums deter- When to attach Form You must Include on line 9 the business portion mined on Form See Form 8941 and complete and attach Form 4562 only if you of expenses for gasoline, oil, repairs, insurare claiming: its instructions to determine which ex- ance, tires, license plates, etc., and penses are eligible for the credit. Depreciation on property placed in Show depreciation on line 13 and rent service during 2010; or lease payments on line 20a. Depreciation on listed property (de- For details, see chapter 4 of Pub fined below), regardless of the date it was Line 15 placed in service; or Deduct premiums paid for business insur- Information on your vehicle. If you claim A section 179 expense deduction. ance on line 15. Deduct on line 14 amounts any car and truck expenses, you must pro- paid for employee accident and health invide certain information on the use of your If you acquired depreciable property for surance. Do not deduct amounts credited to vehicle by completing one of the following. the first time in 2010, see Pub a reserve for self-insurance or premiums Schedule C, Part IV, or Schedule Listed property generally includes but is paid for a policy that pays for your lost C-EZ, Part III, if: (a) you are claiming the not limited to: earnings due to sickness or disability. For standard mileage rate, you lease your vehi- Passenger automobiles weighing details, see chapter 6 of Pub cle, or your vehicle is fully depreciated, and 6,000 pounds or less; (b) you are not required to file Form 4562 for any other reason. If you used more than Any other property used for transpor- one vehicle during the year, attach your tation if the nature of the property lends Lines 16a and 16b own schedule with the information reitself to personal use, such as motorcycles, pickup trucks, etc.; Interest allocation rules. The tax treatment quested in Schedule C, Part IV, or Schedule of interest expense differs depending on its C-EZ, Part III, for each additional vehicle. Any property used for entertainment type. For example, home mortgage interest Form 4562, Part V, if you are claimor recreational purposes (such as photoand investment interest are treated differgraphic, phonographic, communication, ing depreciation on your vehicle or you are ently. Interest allocation rules require required to file Form 4562 for any other and video recording equipment); and you to allocate (classify) your interest exreason (see the instructions for line 13). Computers or peripheral equipment. pense so it is deducted (or capitalized) on Exceptions. Listed property does not inthe right tax treatment. These rules could the correct line of your return and receives clude photographic, phonographic, comaffect how much interest you are allowed to munication, or video equipment used Line 11 exclusively in your trade or business or at deduct on Schedule C or C-EZ. Enter the total cost of contract labor for the your regular business establishment. It also Generally, you allocate interest expense tax year. Contract labor includes payments does not include any computer or periph- by tracing how the proceeds of the loan to persons you do not treat as employees eral equipment used exclusively at a regu- were used. See chapter 4 of Pub. 535 for (for example, independent contractors) for lar business establishment and owned or details. performed for your trade or busi- leased by the person operating the estabness. Do not include contract labor de- lishment. For purposes of these exceptions, If you paid interest on a debt secured by ducted elsewhere on your return, such as a portion of your home is treated as a regufrom that debt were used in connection your main home and any of the proceeds contract labor includible on line 17, 21, 26, lar business establishment only if that porwith your trade or business, see chapter 4 of or 37. Also, do not include salaries and tion meets the requirements under section wages paid to your employees; instead see 280A(c)(1) for deducting expenses for the Pub. 535 to figure the amount that is de- line 26. business use of your home. ductible on Schedule C or C-EZ. You must file Form 1099-MISC, Mis- See the instructions for line 6 on page How to report. If you have a mortgage on cellaneous Income, to report contract labor C-4 if the business use percentage of any real property used in your business (other payments of $600 or more during the year. listed property dropped to 50% or less in than your main home), enter on line 16a the See the Instructions for Form 1099-MISC interest you paid for 2010 to banks or other for details. financial institutions for which you re- ceived a Form 1098 (or similar statement). If you did not receive a Form 1098, enter the interest on line 16b. Line 14 Line 12 Deduct contributions to employee benefit If you paid more mortgage interest than Enter your deduction for depletion on this programs that are not an incidental part of a is shown on Form 1098, see chapter 4 of line. If you have timber depletion, attach pension or profit-sharing plan included on Pub. 535 to find out if you can deduct the Form T. See chapter 9 of Pub. 535 for de- line 19. Examples are accident and health additional interest. If you can, include the tails. plans, group-term life insurance, and de- amount on line 16a. Attach a statement to C-5

6 your return explaining the difference and Federal income taxes, including your enter See attached in the margin next to Lines 20a and 20b self-employment tax. However, you can line 16a. If you rented or leased vehicles, machinery, deduct one-half of your self-employment If you and at least one other person or equipment, enter on line 20a the business tax on Form 1040, line 27, (or Form (other than your spouse if you file a joint portion of your rental cost. But if you 1040NR, line 27, when covered under the return) were liable for and paid interest on leased a vehicle for a term of 30 days or U.S. social security system due to an inter- the mortgage and the other person received more, you may have to reduce your deduc- national social security agreement). the Form 1098, include your share of the tion by an amount called the inclusion Estate and gift taxes. interest on line 16b. Attach a statement to amount. See Leasing a Car in chapter 4 of Pub. 463 to figure this amount. Taxes assessed to pay for improveyour return showing the name and address ments, such as paving and sewers. of the person who received the Form Enter on line 20b amounts paid to rent Taxes on your home or personal use In the margin next to line 16b, enter See or lease other property, such as office space property. attached. in a building. State and local sales taxes on property If you paid interest in 2010 that also purchased for use in your business. Instead, applies to future years, deduct only the part treat these taxes as part of the cost of the that applies to Line 21 property. State and local sales taxes imposed on Deduct the cost of incidental repairs and the buyer that you were required to collect maintenance that do not add to the Line 17 and pay over to state or local governments. property s value or appreciably prolong its These taxes are not included in gross relife. Do not deduct the value of your own Include on this line fees charged by ac- ceipts or sales nor are they a deductible countants and attorneys that are ordinary labor. Do not deduct amounts spent to re- expense. However, if the state or local govstore or replace property; they must be capand necessary expenses directly related to ernment allowed you to retain any part of operating your business. italized. the sales tax you collected, you must include that amount as income on line 6. Include fees for tax advice related to your business and for preparation of the tax Other taxes and license fees not re- forms related to your business. Also include expenses incurred in resolving as- In most cases, you can deduct the cost of Line 22 lated to your business. serted tax deficiencies relating to your materials and supplies only to the extent business. you actually consumed and used them in Line 24a For more information, see Pub. 334 or 535. Line 18 Include on this line your expenses for office supplies and postage. Enter your expenses for lodging and trans- portation connected with overnight travel for business while away from your tax home. In most cases, your tax home is your main place of business, regardless of where you maintain your family home. You can- not deduct expenses paid or incurred in connection with employment away from home if that period of employment exceeds 1 year. Also, you cannot deduct travel ex- penses for your spouse, your dependent, or your business during the tax year (unless you deducted them in a prior tax year). However, if you had incidental materials and supplies on hand for which you kept no inventories or records of use, you can de- duct the cost of those you actually purchased during the tax year, provided that method clearly reflects income. You can also deduct the cost of books, professional instruments, equipment, etc., if you normally use them within a year. Line 19 However, if their usefulness extends sub- any other individual unless that person is Enter your deduction for contributions to a stantially beyond a year, you must gener- your employee, the travel is for a bona fide pension, profit-sharing, or annuity plan, or ally recover their costs through business purpose, and the expenses would plan for the benefit of your employees. If depreciation. otherwise be deductible by that person. the plan included you as a self-employed person, enter contributions made as an ementertainment on this line. Instead, see the Do not include expenses for meals and ployer on your behalf on Form 1040, line 28, or Form 1040NR, line 28, not on Line 23 instructions for line 24b. Schedule C. You can deduct the following taxes and licenses on this line. Instead of keeping records of your ac- In most cases, you must file the applica- tual incidental expenses, you can use an ble form listed below if you maintain a State and local sales taxes imposed on optional method for deducting incidental pension, profit-sharing, or other funded-decollected this tax from the buyer, you must meal expenses on a day you were traveling you as the seller of goods or. If you expenses only if you did not pay or incur ferred compensation plan. The filing realso include the amount collected in gross away from your tax home. The amount of quirement is not affected by whether or not the plan qualified under the Internal Reve- receipts or sales on line 1. the deduction is $5 a day. Incidental exnue Code, or whether or not you claim a Real estate and personal property penses include fees and tips given to por- deduction for the current tax year. There is taxes on business assets. ters, baggage carriers, bellhops, hotel a penalty for failure to timely file these Licenses and regulatory fees for your maids, stewards or stewardesses and others forms. trade or business paid each year to state or on ships, and hotel servants in foreign local governments. But some licenses, such countries. They do not include expenses for Form 5500-EZ. File this form if you have as liquor licenses, may have to be amora one-participant retirement plan that meets tized. See chapter 8 of Pub. 535 for details. lodging taxes, or the costs of telegrams or laundry, cleaning and pressing of clothing, certain requirements. A one-participant Social security and Medicare taxes telephone calls. You cannot use this plan is a plan that covers only you (or you paid to match required withholding from method on any day that you use the stan- and your spouse). your employees wages. Reduce your deinstructions for line 24b). dard meal allowance (as explained in the Form 5500-SF. File this form if you have a duction by the amount shown on Form small plan (fewer than 100 participants in 8846, line 4. You cannot deduct expenses for attendmost cases) that meets certain require- Federal unemployment tax paid. ing a convention, seminar, or similar meetments. Federal highway use tax. ing held outside the North American area Form File this form for a plan that Contributions to state unemployment unless the meeting is directly related to does not meet the requirements for filing insurance fund or disability benefit fund if your trade or business and it is as reasona- Form 5500-EZ or Form 5500-SF. they are considered taxes under state law. ble for the meeting to be held outside the North American area as within it. These For details, see Pub Do not deduct the following. rules apply to both employers and employ- C-6

7 ees. Other rules apply to luxury water travel. For details on travel expenses, see chapter 1 of Pub Individuals subject to the DOT hours of service limits include the following. Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Interstate truck operators who are under DOT regulations. Certain merchant mariners who are Line 30 Business use of your home. You may be able to deduct certain expenses for business use of your home, subject to limitations. You must attach Form 8829 if you claim this deduction. For details, see the Instruc- Line 24b tions for Form 8829 and Pub Enter your total deductible business meal and entertainment expenses. This includes expenses for meals while traveling away under Coast Guard regulations. Line 31 from home for business and for meals that are business-related entertainment. However, you can fully deduct meals, If you have a loss, the amount of loss you incidentals, and entertainment furnished or can deduct this year may be limited. Go to Deductible expenses. Business meal ex- reimbursed to an employee if you properly line 32 before entering your loss on line 31. penses are deductible only if they are (a) treat the expense as wages subject to withdirectly related to or associated with the holding. You can also fully deduct meals, qualified joint venture reporting only rental If you answered No on line G or are a active conduct of your trade or business, (b) incidentals, and entertainment provided to real estate, also see the Instructions for not lavish or extravagant, and (c) incurred a nonemployee to the extent the expenses Form Enter the net profit or deducti- while you or your employee is present at are includible in the gross income of that ble loss here. Combine this amount with the meal. person and reported on Form 1099-MISC. any profit or loss from other businesses and You cannot deduct any expense paid or See Pub. 535 for details and other excep- enter the total on both Form 1040, line 12, incurred for a facility (such as a yacht or tions. and Schedule SE, line 2, or on Form hunting lodge) used for any activity usually 1040NR, line 13. Nonresident aliens using considered entertainment, amusement, or Daycare providers. If you qualify as a Form 1040NR should also enter the total on recreation. family daycare provider, you can use the Schedule SE, line 2, if you are covered Also, you cannot deduct membership standard meal and snack rates, instead of under the U.S. social security system due to dues for any club organized for business, actual costs, to compute the deductible cost an international social security agreement pleasure, recreation, or other social purchildren. See Pub. 587 for details, includ- instructions for information on interna- of meals and snacks provided to eligible currently in effect. See the Schedule SE pose. This includes country clubs, golf and athletic clubs, airline and hotel clubs, and ing recordkeeping requirements. tional social security agreements. Estates clubs operated to provide meals under conand trusts should enter the total on Form ditions favorable to business discussion. 1041, line 3. But it does not include civic or public serv- Line 25 Excess farm loss rules. If your Schedule C ice organizations, professional organiza- Deduct utility expenses only for your trade activity includes processing a farm comtions (such as bar and medical or business. modity as part of your farming business, associations), business leagues, trade as- your deductible loss from that activity may sociations, chambers of commerce, boards Local telephone service. If you used your be limited if you received certain subsidies. of trade, and real estate boards, unless a home phone for business, do not deduct the See page F-7 of the Instructions for Sched- principal purpose of the organization is to base rate (including taxes) of the first ule F for a list of those subsidies. Use one entertain, or provide entertainment faciliphone line into your residence. But you can of the worksheets beginning on page F-9 to ties for, members or their guests. deduct any additional costs you incurred determine if you have an excess farm loss. There are exceptions to these rules as for business that are more than the base rate See the Instructions for Schedule F for well as other rules that apply to sky-box of the first phone line. For example, if you more details on how to complete the work- rentals and tickets to entertainment events. had a second line, you can deduct the busi- sheets. See chapters 1 and 2 of Pub ness percentage of the charges for that line, Statutory employees and qualified joint Standard meal allowance. Instead of deincome not subject to self-employment tax. including the base rate charges. ventures reporting only rental real estate ducting the actual cost of your meals while traveling away from home, you can use the Include your net profit or deductible loss standard meal allowance for your daily from line 31 with other Schedule C Line 26 meals and incidental expenses. Under this amounts on Form 1040, line 12, or on Form method, you deduct a specified amount, dethis amount on Schedule SE, line 2. If you Enter the total salaries and wages for the 1040NR, line 13. However, do not report pending on where you travel, instead of tax year. Do not include salaries and wages keeping records of your actual meal exto file Schedule SE because of other deducted elsewhere on your return or were a statutory employee and are required penses. However, you must still keep recself-employment income, see page SE-4 of amounts paid to yourself. Reduce your de- ords to prove the time, place, and business duction by the amounts claimed on: purpose of your travel. Form 5884, Work Opportunity Credit, the instructions for Schedule SE. line 2; The standard meal allowance is the fed- Rental real estate activity. Unless you are eral M&IE rate. You can find these rates on Form 8844, Empowerment Zone and a qualifying real estate professional, a the Internet at Click on Per Renewal Community Employment Credit, rental real estate activity is a passive activ- Diem Rates for links to locations inside line 2; ity, even if you materially participated in and outside the continental United States. Form 8845, Indian Employment the activity. If you have a loss, you may Credit, line 4; and need to file Form 8582 to figure your de- See chapter 1 of Pub. 463 for details on Form 8932, Credit for Employer Difhow to figure your deduction using the ductible loss to enter on line 31. See the ferential Wage Payments, line 2. Instructions for Form standard meal allowance, including special rules for partial days of travel. Notary public. Do not enter your net profit If you provided taxable fringe from line 31 on Schedule SE, line 2, unless Amount of deduction. In most cases, you benefits to your employees, you are required to file Schedule SE becan deduct only 50% of your business meal such as personal use of a car, do cause of other self-employment income. and entertainment expenses, including not deduct as wages the amount See page SE-4 of the instructions for meals incurred while away from home on applicable to depreciation and other ex- Schedule SE. business. However, for individuals subject penses claimed elsewhere. to the Department of Transportation (DOT) Community income. If you and your hours of service limits, that percentage is In most cases, you are required to file spouse had community income and are filincreased to 80% for business meals con- Form W-2, Wage and Tax Statement, for ing separate returns, see page SE-2 of the sumed during, or incident to, any period of each employee. See the Instructions for instructions for Schedule SE before figurduty for which those limits are in effect. Forms W-2 and W-3. ing self-employment tax. C-7

8 Earned income credit. If you have a net For details, see the Instructions for profit on line 31, this amount is earned in- Form 6198 and Pub come and may qualify you for the earned income credit (EIC). Part III. Cost of Goods Line 33 remember to enter one-half of your business in which the production, purchase, Line 35 To figure your EIC, use the in- structions for Form 1040, lines 64a and 64b. Complete all applicable steps plus Worksheet Sold B. If you are required to file Schedule SE, In most cases, if you engaged in a trade or Your inventories can be valued at cost, the lower of cost or market, or any other method approved by the IRS. However, you are required to use cost if you are using the cash method of accounting. self-employment tax in Part 1, line 1d, of or sale of merchandise was an income-pro- Worksheet B. ducing factor, you must take inventories If you are changing your method of acinto account at the beginning and end of counting beginning with 2010, refigure last your tax year. year s closing inventory using your new method of accounting and enter the result Line 32 on line 35. If there is a difference between Exception for certain taxpayers. If you are At-risk rules. In most cases, if you have a last year s closing inventory and the a qualifying taxpayer or a qualifying small business loss and amounts invested in the refigured amount, attach an explanation business taxpayer (discussed next), you can business for which you are not at risk, you and take it into account when figuring your account for inventoriable items in the same must complete Form 6198 to figure your section 481(a) adjustment. For details, see manner as materials and supplies that are allowable loss. The at-risk rules generally the example on page C-3 under Line F. not incidental. Under this accounting limit the amount of loss (including loss on method, inventory costs for raw materials the disposition of assets) you can claim to purchased for use in producing finished the amount you could actually lose in the goods and merchandise purchased for rebusiness. sale are deductible in the year the finished If you account for inventoriable items in Line 41 Check box 32b if you have amounts in- goods or merchandise are sold (but not the same manner as materials and supplies vested in this business for which you are before the year you paid for the raw materi- that are not incidental, enter on line 41 the not at risk, such as the following. als or merchandise, if you are also using the portion of your raw materials and merchancash method). Enter amounts paid for all dise purchased for resale that is included on Nonrecourse loans used to finance the business, to acquire property used in the raw materials and merchandise during line 40 and was not sold during the year. business, or to acquire the business that are 2010 on line 36. The amount you can de- not secured by your own property (other duct for 2010 is figured on line 42. than property used in the business). However, there is an exception for certain non- Qualifying taxpayer. This is a taxpayer recourse financing borrowed by you in (a) whose average annual gross receipts for Part IV. Information on connection with holding real property. the 3 prior tax years are $1 million or less, and (b) whose business is not a tax shelter Cash, property, or borrowed amounts Your Vehicle (as defined in section 448(d)(3)). used in the business (or contributed to the business, or used to acquire the business) Qualifying small business taxpayer. that are protected against loss by a guaran- This is a taxpayer (a) whose average annual Line 44b tee, stop-loss agreement, or other similar gross receipts for the 3 prior tax years are arrangement (excluding casualty insurance $10 million or less, (b) whose business is In most cases, commuting is travel between and insurance against tort liability). not a tax shelter (as defined in section your home and a work location. If you con- Amounts borrowed for use in the busi- 448(d)(3)), and (c) whose principal business from a person who has an interest in ness activity is not an ineligible activity as personal to business use (or vice versa), verted your vehicle during the year from the business, other than as a creditor, or explained in Rev. Proc You can enter your commuting miles only for the who is related under section 465(b)(3)(C) find Rev. Proc on page 815 of period you drove your vehicle for business. to a person (other than you) having such an Internal Revenue Bulletin at For information on certain travel that is interest. considered a business expense rather than Figuring your deductible loss. If all Changing accounting methods. File commuting, see the Instructions for amounts are at risk in this business, check Form 3115 if you are a qualifying taxpayer Form box 32a. If you answered Yes on line G, enter your loss on line 31. But if you anwant to change to the cash method or to or qualifying small business taxpayer and swered No on line G or are a qualified joint venture reporting only rental real esdental materials and supplies. Part V. Other account for inventoriable items as non-inci- tate, you may need to complete Form 8582 to figure your allowable loss to enter on line 31. See the Instructions for Form 8582 Additional information. For additional Expenses for details. guidance on this method of accounting for inventoriable items, see the following. Include all ordinary and necessary business If you checked box 32b, first complete expenses not deducted elsewhere on Form 6198 to determine the amount of your Pub. 538 discusses both exceptions. Schedule C. List the type and amount of deductible loss. If you answered Yes on If you are a qualifying taxpayer, see each expense separately in the space proline G, enter that amount on line 31. But if Rev. Proc , on page 272 of Internal vided. Enter the total on lines 48 and 27. Do you answered No on line G or are a qualior furniture, replacements or permanent Revenue Bulletin at not include the cost of business equipment fied joint venture reporting only rental real estate, your loss may be further limited. See If you are a qualifying small business improvements to property, or personal, liv- the Instructions for Form If your taxpayer, see Rev. Proc , on page ing, and family expenses. Do not include at-risk amount is zero or less, enter -0- on 815 of Internal Revenue Bulletin charitable contributions. Also, you cannot line 31. Be sure to attach Form 6198 to at deduct fines or penalties paid to a govern- your return. If you checked box 32b and ment for violating any law. For details on you do not attach Form 6198, the process- business expenses, see Pub Certain direct and indirect exing of your tax return may be delayed. penses may have to be capital- Amortization. Include amortization in this Any loss from this business not allowed ized or included in inventory. part. For amortization that begins in 2010, for 2010 only because of the at-risk rules is See the instructions for Part II you must complete and attach Form treated as a deduction allocable to the busiinformation. You can elect to amortize such costs on page C-4. See Pub. 538 for additional ness in as: C-8

9 The cost of pollution-control facilisee Pub riers to individuals with disabilities and the income in the year collected. For details, remove architectural or transportation barties; Amounts paid for research and experielderly. However, you cannot take both a Business start-up costs. If your business mentation; credit (on Form 8826) and a deduction for began in 2010, you can elect to deduct up to the same expenditures. Qualified revitalization expenditures; $5,000 of certain business start-up costs paid or incurred after October 24, 2004, in Qualified disaster expenses. You can elect Amounts paid to acquire, protect, exto deduct certain expenses you paid or intax years before 2010, and up to $10,000 of pand, register, or defend trademarks or certain business start-up costs paid or intrade names; curred as a result of a federally declared curred in The $5,000 limit is reduced disaster occurring before January 1, Goodwill and certain other in- (but not below zero) by the amount by For more information, see chapter 7 of Pub. tangibles; or which your total start-up costs exceed 535. Certain expenses paid or incurred to $50,000 and the $10,000 limit is reduced Film and television production expenses. create or acquire a musical composition or (but not below zero) by the amount by You can elect to deduct costs of certain its copyright. which your start-up costs exceed $60,000. qualified film and television productions. In most cases, you cannot amortize real For details, see chapters 7 and 8 of Pub. For details, see Pub property construction period interest and 535. For amortization that begins in 2010, taxes. Special rules apply for allocating in- Forestation and reforestation costs. Re- you must complete and attach Form terest to real or personal property produced forestation costs are generally capital ex- in your trade or business. Costs of making commercial buildings penditures. However, for each qualified energy efficient. You may be able to de- timber property, you can elect to expense For a complete list, see the Instructions duct part or all of the cost of modifying up to $10,000 ($5,000 if married filing sep- for Form 4562, Part VI. existing commercial buildings to make arately) of qualifying reforestation costs At-risk loss deduction. Any loss from this them energy efficient. For details, see sec- paid or incurred in business that was not allowed as a deduccosts over 84 months. For amortization that tion 179D, Notice , and Notice You can elect to amortize the remaining tion last year only because of the at-risk Notice , I.R.B. rules is treated as a deduction allocable to 1175, is available at begins in 2010, you must complete and atthis business in For the loss to be tach Form deductible, the amount that is at risk must Notice , I.R.B. 725, is The amortization election does not apavailable at ply to trusts, and the expense election does be increased. Bad debts. Include debts and partial debts not apply to estates and trusts. For details from sales or that were included in Deduction for removing barriers to on reforestation expenses, see chapters 7 income and are definitely known to be individuals with disabilities and the eldworthless. If you later collect a debt that erly. You may be able to deduct up to and 8 of Pub you deducted as a bad debt, include it as $15,000 of costs paid or incurred in 2010 to Principal Business or Professional Activity Codes These codes for the Principal Business or Professional Select the category that best describes your primary of real estate agents and brokers) and enter it on Activity classify sole proprietorships by the type of business activity (for example, Real Estate). Then Schedule C or C-EZ, line B. activity they are engaged in to facilitate the select the activity that best identifies the principal administration of the Internal Revenue Code. These source of your sales or receipts (for example, real six-digit codes are based on the North American estate agent). Now find the six-digit code assigned to Note. If your principal source of income is from farming activities, you should file Schedule F. Industry Classification System (NAICS). this activity (for example, , the code for offices Accommodation, Food Investigation & security Support Activities for Agriculture & Spectator sports (including Services, & Drinking Places Forestry professional sports clubs & Janitorial Support activities for animal racetrack operations) Accommodation Landscaping production (including farriers) Rooming & boarding houses Support activities for crop Construction of Buildings RV (recreational vehicle) Office administrative Telephone call centers production (including cotton Nonresidential building parks & recreational camps (including telephone ginning, soil preparation, construction Traveler accommodation answering & planting, & cultivating) Residential building (including hotels, motels, & telemarketing bureaus) Support activities for forestry construction bed & breakfast inns) Travel arrangement & Heavy and Civil Engineering Food Services & Drinking Places reservation Arts, Entertainment, & Construction Drinking places (alcoholic Other business support Recreation Highway, street, & bridge beverages) (including Amusement, Gambling, & Recreation construction Full-service restaurants repossession, court Industries Land subdivision Limited-service eating places reporting, & stenotype Amusement parks & arcades Utility system construction Special food ) Gambling industries Other heavy & civil (including food service Other to buildings & Other amusement & engineering construction contractors & caterers) dwellings recreation (including Specialty Trade Contractors Other support golf courses, skiing facilities, Administrative & Support and (including packaging & Drywall & insulation marinas, fitness centers, Waste Management & labeling, & contractors bowling centers, skating Remediation Services convention & trade show rinks, miniature golf courses) Electrical contractors Administrative & Support Services organizers) Museums, Historical Sites, & Similar Finish carpentry contractors Business service centers Waste Management & Remediation Institutions Flooring contractors (including private mail Services Museums, historical sites, & Framing carpentry contractors centers & copy shops) Waste management & similar institutions Glass & glazing contractors Carpet & upholstery cleaning remediation Performing Arts, Spectator Sports, & Masonry contractors Related Industries Painting & wall covering Collection agencies Agriculture, Forestry, Hunting, Agents & managers for contractors & Fishing Credit bureaus artists, athletes, entertainers, Plumbing, heating & air Document preparation Animal production (including & other public figures conditioning contractors breeding of cats and dogs) Independent artists, writers, & Poured concrete foundation & Employment Fishing performers structure contractors Exterminating & pest control Forestry & logging (including Performing arts companies Roofing contractors forest nurseries & timber Promoters of performing arts, Siding contractors tracts) Facilities support sports, & similar events Site preparation contractors (management) Hunting & trapping C-9

10 Principal Business or Professional Activity Codes (continued) Structural steel & precast Hospitals Dairy product Footwear & leather goods concrete construction Hospitals Fruit & vegetable preserving repair contractors Nursing & Residential Care Facilities & speciality food Home & garden equipment & Tile & terrazzo contractors Grain & oilseed milling appliance repair & Nursing & residential care Other building equipment Animal slaughtering & maintenance facilities contractors processing Reupholstery & furniture Social Assistance Other building finishing Seafood product preparation repair contractors Child day care & packaging Other personal & household Other foundation, structure, & Community food & housing, Sugar & confectionery goods repair & maintenance building exterior contractors & emergency & other relief product All other specialty trade Professional, Scientific, & Individual & family Other food (including contractors coffee, tea, flavorings, & Technical Services Vocational rehabilitation seasonings) Legal Educational Services Leather & Allied Product Offices of certified public Educational Manufacturing accountants (including schools, colleges, Information Footwear (including Payroll & universities) Publishing industries (except leather, rubber, & plastics) Tax preparation Internet) Leather & hide tanning & Other accounting Finance & Insurance Broadcasting (except Internet) & finishing Telecommunications Architectural, Engineering, & Credit Intermediation & Related Other leather & allied product Related Services Activities Broadcasting (except Internet) Architectural Depository credit Telecommunications & Nonmetallic Mineral Product intermediation (including Internet service providers Building inspection Manufacturing commercial banking, savings Data Processing Services Drafting institutions, & credit unions) Cement & concrete product Data processing, hosting, & Engineering Nondepository credit related Geophysical surveying & intermediation (including Clay product & refractory Other information mapping sales financing & consumer (including news syndicates & Landscape architecture lending) Glass & glass product libraries, Internet publishing Activities related to credit & broadcasting) Lime & gypsum product Surveying & mapping (except intermediation (including loan Motion Picture & Sound Recording Other nonmetallic mineral geophysical) brokers) product Motion picture & video Testing laboratories Insurance Agents, Brokers, & industries (except video Mining Computer Systems Design & Related Related Activities rental) Services Insurance agencies & Coal mining Sound recording industries Computer systems design & brokerages Metal ore mining related Other insurance related Manufacturing Nonmetallic mineral mining Specialized Design Services activities & quarrying Apparel Specialized design Securities, Commodity Contracts, & Oil & gas extraction Beverage & tobacco product (including interior, industrial, Other Financial Investments & Support activities for mining graphic, & fashion design) Related Activities Computer & electronic Other Professional, Scientific, & Commodity contracts brokers product Other Services Technical Services Commodity contracts dealers Electrical equipment, Personal & Laundry Services Advertising & related Investment bankers & appliance, & component Barber shops Management, scientific, & securities dealers Fabricated metal product Beauty salons technical consulting Securities & commodity Furniture & related product Cemeteries & crematories Market research & public exchanges Coin-operated laundries & opinion polling Securities brokers Machinery drycleaners Photographic Other financial investment Medical equipment & Drycleaning & laundry Scientific research & activities (including supplies (except development investment advice) Paper coin-operated) (including Translation & interpretation laundry & drycleaning Health Care & Social Petroleum & coal products dropoff & pickup sites) Assistance Veterinary Funeral homes & funeral Ambulatory Health Care Services Plastics & rubber products All other professional, scientific, & technical Home health care Primary metal Linen & uniform supply Medical & diagnostic Printing & related support Nail salons laboratories activities Parking lots & garages Real Estate & Rental & Offices of chiropractors Textile mills Pet care (except veterinary) Leasing Offices of dentists Textile product mills Real Estate Offices of mental health Transportation equipment Photofinishing Lessors of real estate practitioners (except Other personal care (including miniwarehouses & physicians) Wood product (including diet & weight self-storage units) Offices of optometrists reducing centers) Other miscellaneous Offices of real estate agents Offices of physical, All other personal & brokers occupational & speech Chemical Manufacturing Repair & Maintenance Offices of real estate therapists, & audiologists Basic chemical Automotive body, paint, appraisers Offices of physicians (except Paint, coating, & adhesive interior, & glass repair Real estate property managers mental health specialists) Automotive mechanical & Other activities related to real Offices of physicians, mental Pesticide, fertilizer, & other electrical repair & estate health specialists agricultural chemical maintenance Rental & Leasing Services Offices of podiatrists Pharmaceutical & medicine Other automotive repair & Automotive equipment rental Offices of all other maintenance (including oil & leasing miscellaneous health Resin, synthetic rubber, & change & lubrication shops & practitioners artificial & synthetic fibers & Commercial & industrial car washes) filaments machinery & equipment Outpatient care centers Commercial & industrial rental & leasing Other ambulatory health care Soap, cleaning compound, & machinery & equipment toilet preparation Consumer electronics & (including ambulance (except automotive & appliances rental, blood, & organ Other chemical product & electronic) repair & banks) preparation maintenance Formal wear & costume rental Food Manufacturing Electronic & precision equipment repair & General rental centers Animal food maintenance Video tape & disc rental Bakeries & tortilla C-10

11 Principal Business or Professional Activity Codes (continued) Other consumer goods rental General Merchandise Stores Vending machine operators Jewelry, watch, precious General merchandise stores Other direct selling stone, & precious metals Religious, Grantmaking, Civic, Health & Personal Care Stores establishments (including Lumber & other construction Professional, & Similar door-to-door retailing, frozen materials Organizations Cosmetics, beauty supplies, & food plan providers, party perfume stores Machinery, equipment, & Religious, grantmaking, civic, plan merchandisers, & supplies Optical goods stores professional, & similar coffee-break service Metal & mineral (except organizations Pharmacies & drug stores providers) petroleum) Other health & personal care Transportation & Motor vehicle & motor Retail Trade stores vehicle parts & supplies Motor Vehicle & Parts Dealers Warehousing Building Material & Garden Professional & commercial Equipment & Supplies Dealers Automotive parts, accessories, Air transportation equipment & supplies Hardware stores & tire stores Charter bus industry Recyclable materials Home centers Boat dealers General freight trucking, local Sporting & recreational goods Lawn & garden equipment & Motorcycle dealers General freight trucking, long & supplies supplies stores New car dealers distance Toy & hobby goods & Paint & wallpaper stores Recreational vehicle dealers Interurban & rural bus supplies (including motor home & transportation Other building materials Other miscellaneous durable dealers travel trailer dealers) Pipeline transportation goods Clothing & Accessories Stores Used car dealers Rail transportation Merchant Wholesalers, Nondurable All other motor vehicle Scenic & sightseeing Goods Children s & infants clothing stores dealers transportation Apparel, piece goods, & Clothing accessories stores Sporting Goods, Hobby, Book, & School & employee bus notions Music Stores transportation Family clothing stores Beer, wine, & distilled Book stores Specialized freight trucking alcoholic beverage Jewelry stores Hobby, toy, & game stores (including household moving Books, periodicals, & Luggage & leather goods vans) Musical instrument & newspapers stores supplies stores Taxi & limousine service Chemical & allied products Men s clothing stores News dealers & newsstands Urban transit systems Drugs & druggists sundries Shoe stores Prerecorded tape, compact Water transportation Farm product raw materials Women s clothing stores disc, & record stores Other transit & ground Farm supplies Other clothing stores Sewing, needlework, & piece passenger transportation Flower, nursery stock, & Electronic & Appliance Stores goods stores Support activities for florists supplies Camera & photographic Sporting goods stores transportation (including Grocery & related products supplies stores motor vehicle towing) Miscellaneous Store Retailers Paint, varnish, & supplies Computer & software stores Couriers & Messengers Art dealers Paper & paper products Household appliance stores Couriers & messengers Florists Petroleum & petroleum Radio, television, & other Warehousing & Storage Facilities Gift, novelty, & souvenir products electronics stores stores Warehousing & storage Tobacco & tobacco products Food & Beverage Stores Manufactured (mobile) home (except leases of Other miscellaneous Beer, wine, & liquor stores dealers miniwarehouses & nondurable goods Fish & seafood markets self-storage units) Office supplies & stationery Fruit & vegetable markets stores Utilities Wholesale Electronic Markets Grocery stores (including Pet & pet supplies stores and Agents & Brokers Utilities supermarkets & convenience Used merchandise stores Business to business stores without gas) All other miscellaneous store electronic markets Wholesale Trade Meat markets retailers (including tobacco, Wholesale trade agents & Merchant Wholesalers, Durable Other specialty food stores candle, & trophy shops) brokers Goods Furniture & Home Furnishing Stores Nonstore Retailers Electrical & electronic goods Electronic auctions Unclassified establishments Furniture stores Furniture & home furnishing (unable to classify) Home furnishings stores Electronic shopping Hardware, & plumbing & Gasoline Stations Fuel dealers heating equipment & supplies Gasoline stations (including Mail-order houses convenience stores with gas) C-11 Printed on recycled paper

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