8901 Information on Qualifying Children Who Are Not Dependent

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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
SCHEDULE C (FORM 1040), PAGE 1 of 2
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") 3 279 mm (11")
PERFORATE: (NONE)
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Date

©

Revised proofs
requested

OMB No. 1545-0074

©

2006

(Sole Proprietorship)
Partnerships, joint ventures, etc., must file Form 1065 or 1065-B.

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Attach to Form 1040, 1040NR, or 1041.

Name of proprietor

Signature

O.K. to print

Profit or Loss From Business

SCHEDULE C
(Form 1040)
Department of the Treasury
Internal Revenue Service
(99)

Action

©

See Instructions for Schedule C (Form 1040).

Attachment
Sequence No.

09

Social security number (SSN)

A

Principal business or profession, including product or service (see page C-2 of the instructions)

B Enter code from pages C-8, 9, & 10

C

Business name. If no separate business name, leave blank.

D Employer ID number (EIN), if any

E

Business address (including suite or room no.)
City, town or post office, state, and ZIP code

F
G
H

Accounting method:
(1)
Cash
(2)
Accrual
(3)
Other (specify) ©
Did you “materially participate” in the operation of this business during 2006? If “No,” see page C-2 for limit on losses
If you started or acquired this business during 2006, check here

©

Part I
1

Income

©

2

Gross receipts or sales. Caution. If this income was reported to you on Form W-2 and the “Statutory
©
employee” box on that form was checked, see page C-3 and check here
Returns and allowances

3
4

Subtract line 2 from line 1
Cost of goods sold (from line 42 on page 2)

3

5

Gross profit. Subtract line 4 from line 3

5

6
7

Other income, including federal and state gasoline or fuel tax credit or refund (see page C-3)
Gross income. Add lines 5 and 6

Part II

2
4

©

6
7

Expenses. Enter expenses for business use of your home only on line 30.
8

18 Office expense

18

19 Pension and profit-sharing plans

19

8

Advertising
Car and truck expenses (see
page C-4)

9

20 Rent or lease (see page C-5):

10

Commissions and fees

10

a Vehicles, machinery, and equipment

20a

11

Contract labor (see page C-4)

11

b Other business property

20b

12

Depletion

12

21 Repairs and maintenance

21

22 Supplies (not included in Part III)

22

23 Taxes and licenses

23

Depreciation and section 179
expense
deduction
(not
included in Part III) (see
page C-4)

24 Travel, meals, and entertainment:
13

a Travel

24a

14

Employee benefit programs
(other than on line 19)

14

b Deductible meals and
entertainment (see page C-5)

24b

15

Insurance (other than health)

15

16

Interest:
a Mortgage (paid to banks, etc.)

b Other
17
Legal and professional
services

16a
16b

25 Utilities

25

26 Wages (less employment credits)

26

27 Other expenses (from line 48 on
page 2)

27

17
©

28

28

Total expenses before expenses for business use of home. Add lines 8 through 27 in columns

29

Tentative profit (loss). Subtract line 28 from line 7

29

30

Expenses for business use of your home. Attach Form 8829

30

31

Net profit or (loss). Subtract line 30 from line 29.
● If a profit, enter on Form 1040, line 12, and also on Schedule SE, line 2 or Form 1040NR,
line 13 (statutory employees, see page C-6). Estates and trusts, enter on Form 1041, line 3.
● If a loss, you must go to line 32.

32

No

©

1

9

13

Yes

If you have a loss, check the box that describes your investment in this activity (see page C-6).
● If you checked 32a, enter the loss on Form 1040, line 12, and also on Schedule SE, line 2 or
Form 1040NR, line 13 (statutory employees, see page C-6). Estates and trusts, enter on Form 1041,
line 3.
● If you checked 32b, you must attach Form 6198. Your loss may be limited.

For Paperwork Reduction Act Notice, see page C-7 of the instructions.

Cat. No. 11334P

%

%

31

32a

All investment is at risk.

32b

Some investment is not
at risk.

Schedule C (Form 1040) 2006

4
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
SCHEDULE C (FORM 1040), PAGE 2 of 2
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") 3 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Schedule C (Form 1040) 2006

Part III

Page

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33

Method(s) used to
value closing inventory:

34

Was there any change in determining quantities, costs, or valuations between opening and closing inventory?
If “Yes,” attach explanation

a

Cost

b

Lower of cost or market

c

Other (attach explanation)

35

Inventory at beginning of year. If different from last year’s closing inventory, attach explanation

35

36

Purchases less cost of items withdrawn for personal use

36

37

Cost of labor. Do not include any amounts paid to yourself

37

38

Materials and supplies

38

39

Other costs

40

Add lines 35 through 39

41

Inventory at end of year

42

Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on page 1, line 4

Part IV

Yes

No

39
40
41
42

Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on
line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 on page
C-4 to find out if you must file Form 4562.
©

/

/

43

When did you place your vehicle in service for business purposes? (month, day, year)

44

Of the total number of miles you drove your vehicle during 2006, enter the number of miles you used your vehicle for:
a

2

Cost of Goods Sold (see page C-7)

Business

b Commuting (see instructions)

c Other

45

Do you (or your spouse) have another vehicle available for personal use?

Yes

No

46

Was your vehicle available for personal use during off-duty hours?

Yes

No

47a

Do you have evidence to support your deduction?

Yes

No

Yes

No

b If “Yes,” is the evidence written?

Part V

48

Other Expenses. List below business expenses not included on lines 8–26 or line 30.

Total other expenses. Enter here and on page 1, line 27

48
Printed on recycled paper

Schedule C (Form 1040) 2006

PAGER/SGML

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Leading adjust: 0%
(23-Nov-2005)

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Ok to Print

Filename: D:\USERS\62pdb\Epicfiles\2005\I1040SC.XML

Page 1 of 10 of 2005 Instructions for Schedule C

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Department of the Treasury
Internal Revenue Service

2005 Instructions for Schedule C
Use Schedule C (Form 1040) to report income or loss from a business you operated or a
profession you practiced as a sole proprietor. Also, use Schedule C to report wages and
Profit or Loss
expenses you had as a statutory employee. An activity qualifies as a business if your primary
for engaging in the activity is for income or profit and you are involved in the
From Business purpose
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.
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 Revenue Code.

What’s New
Special rules for contributing book or food
inventories under the Katrina Emergency
Tax Relief Act of 2005. See Pub. 4492 for

information on qualifying contributions,
adjusting your inventory, and claiming any
allowable deduction.
Employee retention credit for employers
affected by Hurricane Katrina. If you had

employees in the Hurricane Katrina disaster area, you may be eligible for a credit
against the wages you paid them while your
business was inoperable. For more information, see Form 5884-A.
Biodiesel fuels credit. If you claimed the

biodiesel fuels credit on Form 8864, you
must include the credit in your income on
line 6. See the instructions for line 6 on
page C-3.

General Instructions
Other Schedules and Forms
You May Have To File
• Schedule A to deduct interest, taxes,

and casualty losses not related to your business.
• Schedule E to report rental real estate
and royalty income or (loss) that is not subject to self-employment tax.
• Schedule F to report profit or (loss)
from farming.
• Schedule J to figure your tax by averaging your fishing income over the previous 3 years. Doing so may reduce your tax.
• Schedule SE to pay self-employment
tax on income from any trade or business.
• Form 4562 to claim depreciation on
assets placed in service in 2005, to claim
amortization that began in 2005, to make an
election under section 179 to expense certain property, or to report information on
listed property.
• Form 4684 to report a casualty or theft
gain or loss involving property used in your

trade or business or income-producing
property.
• Form 4797 to report sales, exchanges,
and involuntary conversions (not from a
casualty or theft) of trade or business property.
• Form 8594 to report certain purchases
or sales of groups of assets that constitute a
trade or business.
• Form 8824 to report like-kind exchanges.
• Form 8829 to claim expenses for business use of your home.
• Form 8903 to take a deduction for income from domestic production activities.
Husband-wife business. If you and your
spouse jointly own and operate a business
and share in the profits and losses, you are
partners in a partnership, whether or not
you have a formal partnership agreement.
Do not use Schedule C or C-EZ. Instead,
file Form 1065. See Pub. 541 for more details.
Exception. If you and your spouse
wholly own an unincorporated business as
community property under the community
property laws of a state, foreign country, or
U.S. possession, you can treat the business
either as a sole proprietorship or a partnership. The only states with community property laws are Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Texas,
Washington, and Wisconsin. A change in
your reporting position will be treated as a
conversion of the entity.
Single-member limited liability company
(LLC). Generally, a single-member do-

mestic LLC is not treated as a separate entity for federal income tax purposes. If you
are the sole member of a domestic LLC,
file Schedule C or C-EZ (or Schedule E or
F, if applicable). However, you can elect to
treat a domestic LLC as a corporation. See
Form 8832 for details on the election and
the tax treatment of a foreign LLC.
Heavy highway vehicle use tax. If you use
certain highway trucks, truck-trailers,
tractor-trailers, or buses in your trade or
business, you may have to pay a federal
highway motor vehicle use tax. See the In-

C-1
Cat. No. 24329W

structions for Form 2290 to find out if you
owe this tax.
Information returns. You may have to file

information returns for wages paid to employees, certain payments of fees and other
nonemployee compensation, interest, rents,
royalties, real estate transactions, annuities,
and pensions. You may also have to file an
information return if you sold $5,000 or
more of consumer products to a person on a
buy-sell, deposit-commission, or other similar basis for resale. For details, see the
2005 General Instructions for Forms 1099,
1098, 5498, and W-2G.
If you received cash of more than
$10,000 in one or more related transactions
in your trade or business, you may have to
file Form 8300. For details, see Pub. 1544.

Reportable Transaction
Disclosure Statement
Use Form 8886 to disclose information for
each reportable transaction in which you
participated. Form 8886 must be filed for
each tax year that your federal income tax
liability is affected by your participation in
the transaction. You may have to pay a penalty if you are required to file Form 8886
but do not do so. You may also have to pay
interest and penalties on any reportable
transaction understatements. The following
are reportable transactions.
• Any transaction that is the same as or
substantially similar to tax avoidance transactions identified by the IRS.
• Any transaction offered under conditions of confidentiality for which you paid
an advisor a minimum fee.
• Any transaction for which you have
contractual protection against disallowance
of the tax benefits.
• Any transaction resulting in a loss of
at least $2 million in any single tax year or
$4 million in any combination of tax years.
(At least $50,000 for a single tax year if the
loss arose from a foreign currency transaction defined in section 988(c)(1), whether
or not the loss flows through from an S corporation or partnership.)

Page 2 of 10 of 2005 Instructions for Schedule C

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• Any transaction resulting in a
book-tax difference of more than $10 million on a gross basis.
• Any transaction resulting in a tax
credit of more than $250,000, if you held
the asset generating the credit for 45 days
or less.
See the Instructions for Form 8886 for
more details and exceptions.

Additional Information
See Pub. 334 for more information for
small businesses.

Specific Instructions
Filers of Form 1041. Do not complete the
block labeled “Social security number
(SSN).” Instead, enter your employer identification number (EIN) on line D.

Line A
Describe the business or professional activity that provided your principal source of
income reported on line 1. If you owned
more than one business, you must complete
a separate Schedule C for each business.
Give the general field or activity and the
type of product or service. If your general
field or activity is wholesale or retail trade,
or services connected with production services (mining, construction, or manufacturing), also give the type of customer or
client. For example, “wholesale sale of
hardware to retailers” or “appraisal of real
estate for lending institutions.”

Line D
You need an employer identification number (EIN) only if you had a qualified retirement plan or were required to file an
employment, excise, estate, trust, or alcohol, tobacco, and firearms tax return. If you
need an EIN, see the Instructions for Form
SS-4. If you do not have an EIN, leave line
D blank. Do not enter your SSN.

Line E
Enter your business address. Show a street
address instead of a box number. Include
the suite or room number, if any. If you
conducted the business from your home located at the address shown on Form 1040,
page 1, you do not have to complete this
line.

Line F
Generally, you can use the cash method,
accrual method, or any other method permitted by the Internal Revenue Code. In all
cases, the method used must clearly reflect
income. Unless you are a qualifying taxpayer or a qualifying small business taxpayer, you must use the accrual method for
sales and purchases of inventory items. See
the Part III instructions on page C-6 for the
definition of a qualifying taxpayer and a
qualifying small business taxpayer. Special

rules apply to long-term contracts. See section 460 for details.
If you use the cash method, show all
items of taxable income actually or constructively received during the year (in
cash, property, or services). Income is constructively received when it is credited to
your account or set aside for you to use.
Also, show amounts actually paid during
the year for deductible expenses. However,
if the payment of an expenditure creates an
asset having a useful life that extends substantially beyond the close of the year, it
may not be deductible or may be deductible
only in part for the year of the payment. See
Pub. 535.
If you use the accrual method, report income when you earn it and deduct expenses
when you incur them even if you do not pay
them during the tax year. Accrual-basis
taxpayers are put on a cash basis for deducting business expenses owed to a related cash-basis taxpayer. Other rules
determine the timing of deductions based
on economic performance. See Pub. 538.
To change your accounting method, you
generally must file Form 3115. You may
also have to make an adjustment to prevent
amounts of income or expense from being
duplicated or omitted. This is called a section 481(a) adjustment.
Example. You change to the cash
method of accounting and choose to account for inventoriable items in the same
manner as materials and supplies that are
not incidental. You accrued sales in 2004
for which you received payment in 2005.
You must report those sales in both years as
a result of changing your accounting
method and must make a section 481(a) adjustment to prevent duplication of income.
A net negative section 481(a) adjustment is taken into account entirely in the
year of the change. A net positive section
481(a) adjustment is generally taken into
account over a period of 4 years. Include
any net positive section 481(a) adjustments
on line 6. If the net section 481(a) adjustment is negative, report it in Part V.
For details on figuring section 481(a)
adjustments, see the Instructions for Form
3115, Rev. Proc. 2004-23, 2004-16 I.R.B.
785, available at www.irs.gov/irb/
2004-16_IRB/ar11.html, and Rev. Proc.
2004-57, 2004-38 I.R.B. 498, available at
www.irs.gov/irb/2004-38_IRB/ar11.html.

Line G
If your business activity was not a rental
activity and you met any of the material
participation tests below or the exception
for oil and gas applies (explained on page
C-3), check the “Yes” box. Otherwise,
check the “No” box. If you check the “No”
box, this business is a passive activity. If
you have a loss from this business, see
Limit on losses on page C-3. If you have a
profit from this business activity but have
current year losses from other passive activities or you have prior year unallowed
passive activity losses, see the Instructions
for Form 8582.
Material participation. Participation, for
purposes of the seven material participation

C-2

tests listed below, generally includes any
work you did in connection with an activity
if you owned an interest in the activity at
the time you did the work. The capacity in
which you did the work does not matter.
However, work is not treated as participation if it is work that an owner would not
customarily do in the same type of activity
and one of your main reasons for doing the
work was to avoid the disallowance of
losses or credits from the activity under the
passive activity rules.
Work you did as an investor in an activity is not treated as participation unless you
were directly involved in the day-to-day
management or operations of the activity.
Work done as an investor includes:
• Studying and reviewing financial
statements or reports on the activity,
• Preparing or compiling summaries or
analyses of the finances or operations of the
activity for your own use, and
• Monitoring the finances or operations
of the activity in a nonmanagerial capacity.
Participation by your spouse during the
tax year in an activity you own can be
counted as your participation in the activity. This applies even if your spouse did not
own an interest in the activity and whether
or not you and your spouse file a joint return.
For purposes of the passive activity
rules, you materially participated in the operation of this trade or business activity
during 2005 if you met any of the following
seven tests.
1. You participated in the activity for
more than 500 hours during the tax year.
2. Your participation in the activity for
the tax year was substantially all of the participation in the activity of all individuals
(including individuals who did not own any
interest in the activity) for the tax year.
3. You participated in the activity for
more than 100 hours during the tax year,
and you participated at least as much as any
other person for the tax year. This includes
individuals who did not own any interest in
the activity.
4. The activity is a significant participation activity for the tax year, and you participated in all significant participation
activities for more than 500 hours during
the year. An activity is a “significant participation activity” if it involves the conduct of a trade or business, you participated
in the activity for more than 100 hours during the tax year, and you did not materially
participate under any of the material participation tests (other than this test 4).
5. You materially participated in the activity for any 5 of the prior 10 tax years.
6. The activity is a personal service activity in which you materially participated
for any 3 prior tax years. A personal service
activity is an activity that involves performing personal services in the fields of health,
law, engineering, architecture, accounting,
actuarial science, performing arts, consulting, or any other trade or business in which
capital is not a material income-producing
factor.
7. Based on all the facts and circumstances, you participated in the activity on a
regular, continuous, and substantial basis

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during the tax year. But you do not meet
this test if you participated in the activity
for 100 hours or less during the tax year.
Your participation in managing the activity
does not count in determining if you meet
this test if any person (except you) (a) received compensation for performing management services in connection with the
activity or (b) spent more hours during the
tax year than you spent performing management services in connection with the activity (regardless of whether the person was
compensated for the services).
Rental of personal property. A rental activity (such as long-term equipment leasing) is a passive activity even if you
materially participated in the activity.
However, if you met any of the five exceptions listed under Rental Activities in the
Instructions for Form 8582, the rental of the
property is not treated as a rental activity
and the material participation rules above
apply.
Exception for oil and gas. If you are filing
Schedule C to report income and deductions from an oil or gas well in which you
own a working interest directly or through
an entity that does not limit your liability,
check the “Yes” box. The activity of owning the working interest is not a passive activity regardless of your participation.
Limit on losses. If you checked the “No”

box and you have a loss from this business,
you may have to use Form 8582 to figure
your allowable loss, if any, to enter on
Schedule C, line 31. Generally, you can deduct losses from passive activities only to
the extent of income from passive activities. For details, see Pub. 925.

If you received a
Form W-2 and the “Statutory employee”
box in box 13 of that form was checked,
report your income and expenses related to
that income on Schedule C or C-EZ. Enter
your statutory employee income from box
1 of Form W-2 on line 1 of Schedule C or
C-EZ and check the box on that line. Social
security and Medicare tax should have been
withheld from your earnings; therefore,
you do not owe self-employment tax on
these earnings. Statutory employees include full-time life insurance agents, certain agent or commission drivers and
traveling salespersons, and certain homeworkers.
Statutory employees.

If you had both self-employment income and statutory employee income, you
must file two Schedules C. You cannot use
Schedule C-EZ or combine these amounts
on a single Schedule C.
Installment sales. Generally, the install-

ment method cannot be used to report income from the sale of (a) personal property
regularly sold under the installment
method, or (b) real property held for resale
to customers. But the installment method
can be used to report income from sales of
certain residential lots and timeshares if
you elect to pay interest on the tax due on
that income after the year of sale. See section 453(l)(2)(B) for details. If you make
this election, include the interest on Form
1040, line 63. Also, enter “453(l)(3)” and
the amount of the interest on the dotted line
to the left of line 63.
If you use the installment method, attach a schedule to your return. Show separately for 2005 and the 3 preceding years:
gross sales, cost of goods sold, gross profit,
percentage of gross profit to gross sales,
amounts collected, and gross profit on
amounts collected.

Line H
If you started or acquired this business in
2005, check the box on line H. Also check
the box if you are reopening or restarting
this business after temporarily closing it,
and you did not file a 2004 Schedule C or
C-EZ for this business.

Part I. Income
Except as otherwise provided in the Internal Revenue Code, gross income includes
income from whatever source derived.
Gross income, however, does not include
extraterritorial income that is qualifying
foreign trade income. Use Form 8873 to
figure the extraterritorial income exclusion.
Report it on Schedule C as explained in the
Instructions for Form 8873.

Line 1
Enter gross receipts from your trade or
business. Include amounts you received in
your trade or business that were properly
shown on Forms 1099-MISC. If the total
amounts that were reported in box 7 of
Forms 1099-MISC are more than the total
you are reporting on line 1, attach a statement explaining the difference.

Part II. Expenses
Capitalizing costs of property. If you produced real or tangible personal property or
acquired property for resale, certain expenses attributable to the property generally must be included in inventory costs or
capitalized. In addition to direct costs, producers of inventory property generally
must also include part of certain indirect
costs in their inventory. Purchasers of personal property acquired for resale must include part of certain indirect costs in
inventory only if the average annual gross
receipts for the 3 prior tax years exceed $10
million. Also, you must capitalize part of
the indirect costs that benefit real or tangible personal property constructed for use in
a trade or business, or noninventory property produced for sale to customers. Reduce the amounts on lines 8 through 26 and
Part V by amounts capitalized. For details,
see Pub. 538.
Exception for certain producers. Produc-

ers who account for inventoriable items in
the same manner as materials and supplies
that are not incidental can currently deduct
expenditures for direct labor and all indirect costs that would otherwise be included
in inventory costs. See Cost of Goods Sold
on page C-6 for more details.
Exception for creative property. If you are

an artist, author, or photographer, you may
be exempt from the capitalization rules.
However, your personal efforts must have
created (or reasonably be expected to create) the property. This exception does not
apply to any expense related to printing,
photographic plates, motion picture films,
video tapes, or similar items. These expenses are subject to the capitalization
rules. For details, see Pub. 538.

Line 9

Line 6
Report on line 6 amounts from finance reserve income, scrap sales, bad debts you
recovered, interest (such as on notes and
accounts receivable), state gasoline or fuel
tax refunds you got in 2005, credit for biodiesel fuels claimed on Form 8864, credit
for federal tax paid on gasoline or other
fuels claimed on your 2004 Form 1040,
prizes and awards related to your trade or
business, and other kinds of miscellaneous
business income. Include amounts you received in your trade or business as shown
on Form 1099-PATR. Also, include any
recapture of the deduction for clean-fuel
vehicles used in your business and
clean-fuel vehicle refueling property. For
details, see Pub. 535.
If the business use percentage of any
listed property (defined in the instructions
for line 13 on page C-4) decreased to 50%
or less in 2005, report on this line any recapture of excess depreciation, including
any section 179 expense deduction. Use
Form 4797 to figure the recapture. Also, if
the business use percentage drops to 50%
or less on leased listed property (other than
a vehicle), include on this line any inclusion amount. See Pub. 946 to figure the
amount.

C-3

You can deduct the actual expenses of running your car or truck or take the standard
mileage rate. You must use actual expenses
if you used your vehicle for hire (such as a
taxicab) or you used more than four vehicles simultaneously in your business (such
as in fleet operations). You cannot use actual expenses for a leased vehicle if you
previously used the standard mileage rate
for that vehicle.
You can take the standard mileage rate
for 2005 only if you:
• Owned the vehicle and use the standard mileage rate for the first year you
placed the vehicle in service, or
• Leased the vehicle and are using the
standard mileage rate for the entire lease
period (except the period, if any, before
1998).
If you deduct actual expenses:

• Include on line 9 the business portion

of expenses for gasoline, oil, repairs, insurance, tires, license plates, etc., and
• Show depreciation on line 13 and rent
or lease payments on line 20a.
If you take the standard mileage rate, do
not deduct depreciation, rent or lease payments, or your actual operating expenses.

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Multiply the number of business miles
driven:
• Before September 1, 2005, by 40.5
cents, and
• After August 31, 2005, by 48.5 cents.
Add to this amount your parking fees
and tolls, and enter the total on line 9.
For details, see Pub. 463.
Information on your vehicle. If you claim
any car and truck expenses, you must provide certain information on the use of your
vehicle by completing one of the following.
• Schedule C, Part IV, or Schedule
C-EZ, Part III, if: (a) you are claiming the
standard mileage rate, you lease your vehicle, or your vehicle is fully depreciated, and
(b) you are not required to file Form 4562
for any other reason. If you used more than
one vehicle during the year, attach your
own schedule with the information requested in Schedule C, Part IV, or Schedule
C-EZ, Part III, for each additional vehicle.
• Form 4562, Part V, if you are claiming depreciation on your vehicle or you are
required to file Form 4562 for any other
reason (see the instructions for line 13).

Line 11
Enter the total cost of contract labor for the
tax year. Do not include contract labor deducted elsewhere on your return such as
contract labor that you included in Part III.
Also, do not include salaries and wages
paid to your employees, instead see line 26.

Line 12
Enter your deduction for depletion on this
line. If you have timber depletion, attach
Form T. See Pub. 535 for details.

Line 13
Depreciation and section 179 expense
deduction. Depreciation is the annual de-

duction allowed to recover the cost or other
basis of business or investment property
having a useful life substantially beyond
the tax year. You can also depreciate improvements made to leased business property. However, stock in trade, inventories,
and land are not depreciable. Depreciation
starts when you first use the property in
your business or for the production of income. It ends when you take the property
out of service, deduct all your depreciable
cost or other basis, or no longer use the
property in your business or for the production of income. You can also elect under
section 179 to expense part of the cost of
certain property you bought in 2005 for use
in your business. See the Instructions for
Form 4562 to figure the amount to enter on
line 13.
When to attach Form 4562. You must

complete and attach Form 4562 only if:
• You are claiming depreciation on
property placed in service during 2005;
• You are claiming depreciation on
listed property (defined below), regardless
of the date it was placed in service; or

• You are claiming a section 179 expense deduction.
If you acquired depreciable property for
the first time in 2005, see Pub. 946.
Listed property generally includes, but
is not limited to:
• Passenger automobiles weighing
6,000 pounds or less;
• Any other property used for transportation if the nature of the property lends
itself to personal use, such as motorcycles,
pickup trucks, etc.;
• Any property used for entertainment
or recreational purposes (such as photographic, phonographic, communication,
and video recording equipment);
• Cellular telephones or other similar
telecommunications equipment; and
• Computers or peripheral equipment.
Exceptions. Listed property does not include photographic, phonographic, communication, or video equipment used
exclusively in your trade or business or at
your regular business establishment. It also
does not include any computer or peripheral equipment used exclusively at a regular business establishment and owned or
leased by the person operating the establishment. For purposes of these exceptions,
a portion of your home is treated as a regular business establishment only if that portion meets the requirements under section
280A(c)(1) for deducting expenses for the
business use of your home.
See the instructions for line 6 on page
C-3 if the business use percentage of any
listed property decreased to 50% or less in
2005.

Line 14
Deduct contributions to employee benefit
programs that are not an incidental part of a
pension or profit-sharing plan included on
line 19. Examples are accident and health
plans, group-term life insurance, and dependent care assistance programs. If you
made contributions on your behalf as a
self-employed person to a dependent care
assistance program, complete Form 2441,
Parts I and III, to figure your deductible
contributions to that program.
Do not include on line 14 any contributions you made on your behalf as a self-employed person to an accident and health
plan or for group-term life insurance. You
may be able to deduct on Form 1040, line
29, the amount you paid for health insurance on behalf of yourself, your spouse,
and dependents, even if you do not itemize
your deductions. See the instructions for
Form 1040, line 29, for details.

Line 15
Deduct premiums paid for business insurance on line 15. Deduct on line 14 amounts
paid for employee accident and health insurance. Do not deduct amounts credited to
a reserve for self-insurance or premiums
paid for a policy that pays for your lost
earnings due to sickness or disability. For
details, see Pub. 535.

C-4

Lines 16a and 16b
Interest allocation rules. The tax treatment
of interest expense differs depending on its
type. For example, home mortgage interest
and investment interest are treated differently. “Interest allocation” rules require
you to allocate (classify) your interest expense so it is deducted (or capitalized) on
the correct line of your return and receives
the right tax treatment. These rules could
affect how much interest you are allowed to
deduct on Schedule C or C-EZ.
Generally, you allocate interest expense
by tracing how the proceeds of the loan
were used. See Pub. 535 for details.
If you paid interest on a debt secured by
your main home and any of the proceeds
from that debt were used in connection
with your trade or business, see Pub. 535 to
figure the amount that is deductible on
Schedule C or C-EZ.
How to report. If you have a mortgage on
real property used in your business (other
than your main home), enter on line 16a the
interest you paid for 2005 to banks or other
financial institutions for which you received a Form 1098 (or similar statement).
If you did not receive a Form 1098, enter
the interest on line 16b.
If you paid more mortgage interest than
is shown on Form 1098, see Pub. 535 to
find out if you can deduct the additional
interest. If you can, include the amount on
line 16a. Attach a statement to your return
explaining the difference and enter “See
attached” in the margin next to line 16a.
If you and at least one other person
(other than your spouse if you file a joint
return) were liable for and paid interest on
the mortgage and the other person received
the Form 1098, include your share of the
interest on line 16b. Attach a statement to
your return showing the name and address
of the person who received the Form 1098.
In the margin next to line 16b, enter “See
attached.”
If you paid interest in 2005 that applies
to future years, deduct only the part that
applies to 2005.

Line 17
Include on this line fees for tax advice related to your business and for preparation
of the tax forms related to your business.

Line 19
Enter your deduction for contributions to a
pension, profit-sharing, or annuity plan, or
plans for the benefit of your employees. If
the plan included you as a self-employed
person, enter contributions made as an employer on your behalf on Form 1040, line
28, not on Schedule C.
Generally, you must file the applicable
form listed below if you maintain a pension, profit-sharing, or other funded-deferred compensation plan. The filing
requirement is not affected by whether or
not the plan qualified under the Internal
Revenue Code, or whether or not you claim
a deduction for the current tax year. There

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is a penalty for failure to timely file these
forms.
Form 5500. File this form for a plan that is
not a one-participant plan (see below).
Form 5500-EZ. File this form for a
one-participant plan. A one-participant
plan is a plan that only covers you (or you
and your spouse).
For details, see Pub. 560.

Lines 20a and 20b
If you rented or leased vehicles, machinery,
or equipment, enter on line 20a the business
portion of your rental cost. But if you
leased a vehicle for a term of 30 days or
more, you may have to reduce your deduction by an amount called the inclusion
amount. See Pub. 463 to figure your inclusion amount.
Enter on line 20b amounts paid to rent
or lease other property, such as office space
in a building.

• Federal income taxes, including your
self-employment tax. However, you can
deduct one-half of your self-employment
tax on Form 1040, line 27.
• Estate and gift taxes.
• Taxes assessed to pay for improvements, such as paving and sewers.
• Taxes on your home or personal use
property.
• State and local sales taxes on property
purchased for use in your business. Instead,
treat these taxes as part of the cost of the
property.
• State and local sales taxes imposed on
the buyer that you were required to collect
and pay over to state or local governments.
These taxes are not included in gross receipts or sales nor are they a deductible
expense. However, if the state or local government allowed you to retain any part of
the sales tax you collected, you must include that amount as income on line 6.
• Other taxes and license fees not related to your business.

Line 21

Line 24a

Deduct the cost of repairs and maintenance.
Include labor, supplies, and other items that
do not add to the value or increase the life
of the property. Do not deduct the value of
your own labor. Do not deduct amounts
spent to restore or replace property; they
must be capitalized.

Enter your expenses for lodging and transportation connected with overnight travel
for business while away from your tax
home. Generally, your tax home is your
main place of business regardless of where
you maintain your family home. You cannot 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 expenses for your spouse, your dependent, or
any other individual unless that person is
your employee, the travel is for a bona fide
business purpose, and the expenses would
otherwise be deductible by that person.

Line 22
Generally, you can deduct the cost of supplies only to the extent you actually consumed and used them in your business
during the tax year (unless you deducted
them in a prior tax year). However, if you
had incidental supplies on hand for which
you kept no inventories or records of use,
you can deduct the cost of supplies you
actually purchased during the tax year, provided that method clearly reflects income.

Line 23
You can deduct the following taxes and
licenses on this line.
• State and local sales taxes imposed on
you as the seller of goods or services. If you
collected this tax from the buyer, you must
also include the amount collected in gross
receipts or sales on line 1.
• Real estate and personal property
taxes on business assets.
• Licenses and regulatory fees for your
trade or business paid each year to state or
local governments. But some licenses, such
as liquor licenses, may have to be amortized. See Pub. 535 for details.
• Social security and Medicare taxes
paid to match required withholding from
your employees’ wages. Also, federal unemployment tax paid. Reduce your deduction by the amount shown on Form 8846,
line 4.
• Federal highway use tax.
Do not deduct the following on this line.

Do not include expenses for meals and
entertainment on this line. Instead, see the
instructions for line 24b on this page.
Instead of keeping records of your actual incidental expenses, you can use an
optional method for deducting incidental
expenses only if you did not pay or incur
meal expenses on a day you were traveling
away from your tax home. The amount of
the deduction is $3 a day. Incidental expenses include fees and tips given to porters, baggage carriers, bellhops, hotel
maids, stewards or stewardesses and others
on ships, and hotel servants in foreign
countries. They do not include expenses for
laundry, cleaning and pressing of clothing,
lodging taxes, or the costs of telegrams or
telephone calls. You cannot use this
method on any day that you use the standard meal allowance (as explained in the
instructions for line 24b).
You cannot deduct expenses for attending a foreign convention unless it is directly
related to your trade or business and it is as
reasonable for the meeting to be held
outside the North American area as within
it. These rules apply to both employers and
employees. Other rules apply to luxury
water travel.
For details, see Pub. 463.

C-5

Line 24b
Enter your total deductible business meal
and entertainment expenses. Include meal
expenses while traveling away from home
for business.
Deductible expenses. Business meal expenses are deductible only if they are (a)
directly related to or associated with the
active conduct of your trade or business, (b)
not lavish or extravagant, and (c) incurred
while you or your employee is present at
the meal.
You cannot deduct any expense paid or
incurred for a facility (such as a yacht or
hunting lodge) used for any activity usually
considered entertainment, amusement, or
recreation.
Also, you cannot deduct membership
dues for any club organized for business,
pleasure, recreation, or other social purpose. This includes country clubs, golf and
athletic clubs, airline and hotel clubs, and
clubs operated to provide meals under conditions favorable to business discussion.
But it does not include civic or public service organizations, professional organizations (such as bar and medical
associations), business leagues, trade associations, chambers of commerce, boards
of trade, and real estate boards, unless a
principal purpose of the organization is to
entertain, or provide entertainment facilities for, members or their guests.
There are exceptions to these rules as
well as other rules that apply to sky-box
rentals and tickets to entertainment events.
See Pub. 463.
Standard meal allowance. Instead of the
actual cost of your meals while traveling
away from home, you can use the standard
meal allowance for your daily meals and
incidental expenses. Under this method,
you deduct a specified amount, depending
on where you travel, instead of keeping
records of your actual meal expenses.
However, you must still keep records to
prove the time, place, and business purpose
of your travel.
The standard meal allowance is the federal M&IE rate. You can find these rates on
the Internet at www.gsa.gov. Click on “Per
Diem Rates.” For locations outside the continental United States, the applicable rates
are published monthly. You can find these
rates on the Internet at www.state.gov.
See Pub. 463 for details on how to figure your deduction using the standard meal
allowance, including special rules for partial days of travel.
Amount of deduction. Generally, you can
deduct only 50% of your business meal and
entertainment expenses, including meals
incurred while away from home on business. For individuals subject to the Department of Transportation (DOT) hours of
service limits, that percentage is increased
to 70% for business meals consumed during, or incident to, any period of duty for
which those limits are in effect. Individuals
subject to the DOT hours of service limits
include the following persons.
• Certain air transportation workers
(such as pilots, crew, dispatchers, mechanics, and control tower operators) who are

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under Federal Aviation Administration regulations.
• Interstate truck operators who are
under DOT regulations.
• Certain merchant mariners who are
under Coast Guard regulations.
However, you can fully deduct meals,
incidentals, and entertainment furnished or
reimbursed to an employee if you properly
treat the expense as wages subject to withholding. You can also fully deduct meals,
incidentals, and entertainment provided to
a nonemployee to the extent the expenses
are includible in the gross income of that
person and reported on Form 1099-MISC.
See Pub. 535 for details and other exceptions.
Daycare providers. If you qualify as a
family daycare provider, you can use the
standard meal and snack rates, instead of
actual costs, to compute the deductible cost
of meals and snacks provided to eligible
children. See Pub. 587 for details, including recordkeeping requirements.

Line 25
Deduct only utility expenses for your trade
or business.
Local telephone service. If you used your
home phone for business, do not deduct the
base rate (including taxes) of the first
phone line into your residence. But you can
deduct expenses for any additional costs
you incurred for business that are more
than the cost of the base rate for the first
phone line. For example, if you had a second line, you can deduct the business percentage of the charges for that line,
including the base rate charges.

Line 26
Enter the total salaries and wages for the
tax year. Do not include salaries and wages
deducted elsewhere on your return or
amounts paid to yourself. Reduce your deduction by the amounts claimed on:
• Form 5884, Work Opportunity Credit,
line 2;
• Form 5884-A, Hurricane Katrina Employee Retention Credit, line 2;
• Form 8844, Empowerment Zone and
Renewal Community Employment Credit,
line 2;
• Form 8845, Indian Employment
Credit, line 4; and
• Form 8861, Welfare-to-Work Credit,
line 2.

If you provided taxable fringe
benefits to your employees,
such as personal use of a car, do
not deduct as wages the amount
applicable to depreciation and other expenses claimed elsewhere.

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 Instructions for Form 8829 and Pub. 587.

Line 31
If you have a loss, the amount of loss you
can deduct this year may be limited. Go to
line 32 before entering your loss on line 31.
If you answered “No” to Schedule C, Question G, also see the Instructions for Form
8582. Enter the net profit or deductible loss
here. Combine this amount with any profit
or loss from other businesses, and enter the
total on Form 1040, line 12, and Schedule
SE, line 2. Estates and trusts should enter
the total on Form 1041, line 3.
If you have a net profit on line 31, this
amount is earned income and may qualify
you for the earned income credit. See the
instructions for Form 1040, lines 66a and
66b, for details.
Statutory employees. Include your net
profit or deductible loss from line 31 with
other Schedule C amounts on Form 1040,
line 12. However, do not report this amount
on Schedule SE, line 2. If you are required
to file Schedule SE because of other
self-employment income, see the Instructions for Schedule SE.

Line 32
At-risk rules. Generally, if you have (a) a

business loss and (b) amounts in the business for which you are not at risk, you will
have to complete Form 6198 to figure your
allowable loss. The at-risk rules generally
limit the amount of loss (including loss on
the disposition of assets) you can claim to
the amount you could actually lose in the
business.
Check box 32b if you have amounts for
which you are not at risk in this business,
such as the following.
• Nonrecourse loans used to finance the
business, to acquire property used in the
business, or to acquire the business that are
not secured by your own property (other
than property used in the business). However, there is an exception for certain nonrecourse financing borrowed by you in
connection with holding real property.
• Cash, property, or borrowed amounts
used in the business (or contributed to the
business, or used to acquire the business)
that are protected against loss by a guarantee, stop-loss agreement, or other similar
arrangement (excluding casualty insurance
and insurance against tort liability).
• Amounts borrowed for use in the business from a person who has an interest in
the business, other than as a creditor, or
who is related under section 465(b)(3) to a
person (other than you) having such an interest.
If all amounts are at risk in this business,
check box 32a and enter your loss on line
31. But if you answered “No” to Question
G, you may need to complete Form 8582 to
figure your deductible loss. See the Instructions for Form 8582 for details.
If you checked box 32b, see Form 6198
to determine the amount of your deductible

C-6

loss. But if you answered “No” to Question
G, your loss may be further limited. See the
Instructions for Form 8582. If your at-risk
amount is zero or less, enter -0- on line 31.
Be sure to attach Form 6198 to your return.
If you checked box 32b and you do not
attach Form 6198, the processing of your
tax return may be delayed.
Any loss from this business not allowed
for 2005 because of the at-risk rules is
treated as a deduction allocable to the business in 2006. For details, see the Instructions for Form 6198 and Pub. 925.

Part III. Cost of Goods
Sold
Generally, if you engaged in a trade or
business in which the production, purchase,
or sale of merchandise was an income-producing factor, you must take inventories
into account at the beginning and end of
your tax year.
However, if you are a qualifying taxpayer or a qualifying small business taxpayer, you can account for inventoriable
items in the same manner as materials and
supplies that are not incidental. To change
your accounting method, see the instructions for line F on page C-2.
A qualifying taxpayer is a taxpayer (a)
whose average annual gross receipts for the
3 prior tax years are $1 million or less, and
(b) whose business is not a tax shelter (as
defined in section 448(d)(3)).
A qualifying small business taxpayer is
a taxpayer (a) whose average annual gross
receipts for the 3 prior tax years are more
than $1 million but not more than $10 million, (b) whose business is not a tax shelter
(as defined in section 448(d)(3)), and (c)
whose principal business activity is not an
ineligible activity as explained in Rev.
Proc. 2002-28. You can find Rev. Proc.
2002-28 on page 815 of Internal Revenue
Bulletin 2002-18 at www.irs.gov/pub/
irs-irbs/irb02-18.pdf
Under this accounting method, inventory costs for raw materials purchased for
use in producing finished goods and merchandise purchased for resale are deductible in the year the finished goods or
merchandise are sold (but not before the
year you paid for the raw materials or merchandise, if you are also using the cash
method). Enter amounts paid for all raw
materials and merchandise during 2005 on
line 36. The amount you can deduct for
2005 is figured on line 42.
For additional
guidance on this method of accounting for
inventoriable items, see Rev. Proc. 2001-10
if you are a qualifying taxpayer or Rev.
Proc. 2002-28 if you are a qualifying small
business taxpayer. You can find Rev. Proc.
2001-10 on page 272 of Internal Revenue
Bulletin 2001-2 at www.irs.gov/pub/
irs-irbs/irb01-02.pdf , and Rev. Proc.
2002-28 on page 815 of Internal Revenue
Bulletin 2002-18 at www.irs.gov/pub/
irs-irbs/irb02-18.pdf.
Additional information.

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Certain direct and indirect expenses may have to be capitalized or included in inventory.
See the instructions for Part II
beginning on page C-3.

Line 33
Your inventories can be valued at cost; cost
or market value, whichever is lower; or any
other method approved by the IRS. However, you are required to use cost if you are
using the cash method of accounting.

Line 35
If you are changing your method of accounting beginning with 2005, refigure last
year’s closing inventory using your new
method of accounting and enter the result
on line 35. If there is a difference between
last year’s closing inventory and the
refigured amount, attach an explanation
and take it into account when figuring your
section 481(a) adjustment. See the example
on page C-2 for details.

Line 41
If you account for inventoriable items in
the same manner as materials and supplies
that are not incidental, enter on line 41 the
portion of your raw materials and merchandise purchased for resale that are included
on line 40 and were not sold during the
year.

Part IV. Information on
Your Vehicle
Line 44b
Generally, commuting is travel between
your home and a work location. If you converted your vehicle during the year from
personal to business use (or vice versa),
enter your commuting miles only for the
period you drove your vehicle for business.
For information on certain travel that is
considered a business expense rather than
commuting, see the Instructions for Form
2106.

Part V. Other
Expenses
Include all ordinary and necessary business
expenses not deducted elsewhere on
Schedule C. List the type and amount of
each expense separately in the space provided. Enter the total on lines 48 and 27. Do
not include the cost of business equipment
or furniture, replacements or permanent
improvements to property, or personal, liv-

ing, and family expenses. Do not include
charitable contributions. Also, you cannot
deduct fines or penalties paid to a government for violating any law. For details on
business expenses, see Pub. 535.
Amortization. Include amortization in this
part. For amortization that begins in 2005,
you must complete and attach Form 4562.
You can amortize:
• The cost of pollution-control facilities.
• Amounts paid for research and experimentation.
• Qualified revitalization expenditures.
• Amounts paid to acquire, protect, expand, register, or defend trademarks or
trade names.
• Goodwill and certain other intangibles.
In general, you cannot amortize real
property construction period interest and
taxes. Special rules apply for allocating interest to real or personal property produced
in your trade or business.
At-risk loss deduction. Any loss from this
activity that was not allowed as a deduction
last year because of the at-risk rules is
treated as a deduction allocable to this activity in 2005.
Business start-up costs. You can either deduct or begin amortizing certain business
start-up costs in the year your business begins. The method you use depends on when
the costs were paid or incurred.
Paid or incurred before October 23,
2004. You can elect to amortize these business start-up costs over 60 months or more,
beginning with the month the business began.
Paid or incurred after October 22, 2004.
You can elect to deduct up to $5,000 of
these business start-up costs for the year
your business began. This limit is reduced
(but not below zero) by the amount by
which your total start-up costs exceed
$50,000. Your remaining start-up costs can
be amortized over a 180-month period, beginning with the month the business began.
For details, see Pub. 535. For amortization that begins in 2005, you must complete
and attach Form 4562.
Capital construction fund. Do not claim
on Schedule C or C-EZ the deduction for
amounts contributed to a capital construction fund set up under the Merchant Marine
Act of 1936. Instead, reduce the amount
you would otherwise enter on Form 1040,
line 43, by the amount of the deduction.
Next to line 43, enter “CCF” and the
amount of the deduction. For details, see
Pub. 595.
Clean-fuel vehicles and clean-fuel vehicle
refueling property. You may be able to de-

duct part of the cost of qualified clean-fuel
vehicle property used in your business and
qualified clean-fuel vehicle refueling property. See Pub. 535 for details.
Disabled access credit and the deduction
for removing barriers to individuals with
disabilities and the elderly. You may be

able to claim a tax credit of up to $5,000 for

C-7

eligible expenditures paid or incurred in
2005 to provide access to your business for
individuals with disabilities. See Form
8826 for details. You can also deduct up to
$15,000 of costs paid or incurred in 2005 to
remove architectural or transportation barriers to individuals with disabilities and the
elderly. However, you cannot take both the
credit and the deduction on the same expenditures.
Film and television production expenses.

You can elect to deduct costs of certain
qualified film and television productions.
For details, see Pub. 535.
Forestation and reforestation costs. You
can elect to deduct up to $10,000 ($5,000 if
married filing separately) of qualifying reforestation costs paid or incurred after October 22, 2004. The remaining costs can be
amortized over an 84-month period. The
amortization election does not apply to
trusts and the expense election does not
apply to estates and trusts. For details, see
Pub. 535. For amortization that begins in
2005, you must complete and attach Form
4562.
Paperwork Reduction Act Notice. We ask

for the information on this form to carry out
the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are
complying with these laws and to allow us
to figure and collect the right amount of
tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long
as their contents may become material in
the administration of any Internal Revenue
law. Generally, tax returns and return information are confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated burden for
individual taxpayers filing this form is included in the estimates shown in the instructions for their individual income tax
return. The estimated burden for all other
taxpayers who file this form is approved
under OMB control number 1545-1974 and
is shown below.
Recordkeeping . . . . . . . . . 1 hr. 18 min.
Learning about the law or
the form . . . . . . . . . . . . . .

24 min.

Preparing the form . . . . . .

1 hr.

Copying, assembling, and
sending the form to the IRS

20 min.

If you have comments concerning the
accuracy of these time estimates or suggestions for making this form simpler, we
would be happy to hear from you. See the
instructions for the tax return with which
this form is filed.

Page 8 of 10 of 2005 Instructions for Schedule C

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Principal Business or Professional Activity Codes
These codes for the Principal Business or Professional
Activity classify sole proprietorships by the type of
activity they are engaged in to facilitate the
administration of the Internal Revenue Code. These
six-digit codes are based on the North American
Industry Classification System (NAICS).

Accommodation, Food
Services, & Drinking Places
Accommodation
721310
721210
721100

Rooming & boarding houses
RV (recreational vehicle)
parks & recreational camps
Traveler accommodation
(including hotels, motels, &
bed & breakfast inns)

Food Services & Drinking
Places
722410
722110
722210
722300

Drinking places (alcoholic
beverages)
Full-service restaurants
Limited-service eating places
Special food services
(including food service
contractors & caterers)

Administrative & Support
and Waste Management &
Remediation Services
Administrative & Support
Services
561430
561740
561440
561450
561410
561300
561710
561210
561600
561720
561730
561110
561420

561500
561490

561790
561900

Business service centers
(including private mail
centers & copy shops)
Carpet & upholstery cleaning
services
Collection agencies
Credit bureaus
Document preparation
services
Employment services
Exterminating & pest control
services
Facilities support
(management) services
Investigation & security
services
Janitorial services
Landscaping services
Office administrative services
Telephone call centers
(including telephone
answering services &
telemarketing bureaus)
Travel arrangement &
reservation services
Other business support
services (including
repossession services, court
reporting, & stenotype
services)
Other services to buildings &
dwellings
Other support services
(including packaging &
labeling services, &
convention & trade show
organizers)

Waste Management &
Remediation Services
562000

Waste management &
remediation services

Support Activities for
Agriculture & Forestry

238290

115210

238390

115110

115310

112900
114110
113000
114210

Animal production (including
breeding of cats and dogs)
Fishing
Forestry & logging (including
forest nurseries & timber
tracts)
Hunting & trapping

Support activities for animal
production (including farriers)
Support activities for crop
production (including cotton
ginning, soil preparation,
planting, & cultivating)
Support activities for forestry

Arts, Entertainment, &
Recreation
Amusement, Gambling, &
Recreation Industries
713100
713200
713900

238190
238990

712100

611000

711510
711100
711300
711210

522100

522200

Museums, historical sites, &
similar institutions

522300

Agents & managers for
artists, athletes, entertainers,
& other public figures
Independent artists, writers, &
performers
Performing arts companies
Promoters of performing arts,
sports, & similar events
Spectator sports (including
professional sports clubs &
racetrack operations)

Construction of Buildings
236200
236100

Nonresidential building
construction
Residential building
construction

237210
237100
237990

238210
238350
238330
238130
238150
238140
238320

238110
238160
238170
238910
238120
238340

524210
524290

Highway, street, & bridge
construction
Land subdivision
Utility system construction
Other heavy & civil
engineering construction

Depository credit
intermediation (including
commercial banking, savings
institutions, & credit unions)
Nondepository credit
intermediation (including
sales financing & consumer
lending)
Activities related to credit
intermediation (including loan
brokers)

Insurance agencies &
brokerages
Other insurance related
activities

Securities, Commodity
Contracts, & Other Financial
Investments & Related
Activities
523140
523130
523110

523120
523900

Commodity contracts brokers
Commodity contracts dealers
Investment bankers &
securities dealers
Securities & commodity
exchanges
Securities brokers
Other financial investment
activities (including
investment advice)

Health Care & Social
Assistance
Ambulatory Health Care
Services

Specialty Trade Contractors
238310

Educational services
(including schools, colleges,
& universities)

Insurance Agents, Brokers, &
Related Activities

523210

Heavy and Civil Engineering
Construction
237310

Other building equipment
contractors
Other building finishing
contractors
Other foundation, structure, &
building exterior contractors
All other specialty trade
contractors

Finance & Insurance
Credit Intermediation &
Related Activities

Amusement parks & arcades
Gambling industries
Other amusement &
recreation services (including
golf courses, skiing facilities,
marinas, fitness centers,
bowling centers, skating
rinks, miniature golf courses)

Performing Arts, Spectator
Sports, & Related Industries
711410

of real estate agents and brokers) and enter it on
Schedule C or C-EZ, line B.
Note. If your principal source of income is from
farming activities, you should file Schedule F.

Educational Services

Museums, Historical Sites, &
Similar Institutions

238220

Agriculture, Forestry,
Hunting, & Fishing

Select the category that best describes your primary
business activity (for example, Real Estate). Then
select the activity that best identifies the principal
source of your sales or receipts (for example, real
estate agent). Now find the six-digit code assigned to
this activity (for example, 531210, the code for offices

Drywall & insulation
contractors
Electrical contractors
Finish carpentry contractors
Flooring contractors
Framing carpentry contractors
Glass & glazing contractors
Masonry contractors
Painting & wall covering
contractors
Plumbing, heating & airconditioning contractors
Poured concrete foundation &
structure contractors
Roofing contractors
Siding contractors
Site preparation contractors
Structural steel & precast
concrete construction
contractors
Tile & terrazzo contractors

621610
621510
621310
621210
621330
621320
621340
621111
621112
621391
621399
621400

C-8

Home health care services
Medical & diagnostic
laboratories
Offices of chiropractors
Offices of dentists
Offices of mental health
practitioners (except
physicians)
Offices of optometrists
Offices of physical,
occupational & speech
therapists, & audiologists
Offices of physicians (except
mental health specialists)
Offices of physicians, mental
health specialists
Offices of podiatrists
Offices of all other
miscellaneous health
practitioners
Outpatient care centers

621900

Other ambulatory health care
services (including ambulance
services, blood, & organ
banks)

Hospitals
622000

Hospitals

Nursing & Residential Care
Facilities
623000

Nursing & residential care
facilities

Social Assistance
624410
624200
624100
624310

Child day care services
Community food & housing,
& emergency & other relief
services
Individual & family services
Vocational rehabilitation
services

Information
511000

Publishing industries (except
Internet)

Broadcasting (except Internet)
& Telecommunications
515000
517000

Broadcasting (except Internet)
Telecommunications

Internet Publishing &
Broadcasting
516110

Internet publishing &
broadcasting

Internet Service Providers,
Web Search Portals, & Data
Processing Services
518210
518111
518112
519100

Data processing, hosting, &
related services
Internet service providers
Web search portals
Other information services
(including news syndicates
and libraries)

Motion Picture & Sound
Recording
512100
512200

Motion picture & video
industries (except video
rental)
Sound recording industries

Manufacturing
315000
312000
334000
335000
332000
337000
333000
339110
322000
324100
326000
331000
323100
313000
314000
336000
321000
339900

Apparel mfg.
Beverage & tobacco product
mfg.
Computer & electronic
product mfg.
Electrical equipment,
appliance, & component mfg.
Fabricated metal product mfg.
Furniture & related product
mfg.
Machinery mfg.
Medical equipment &
supplies mfg.
Paper mfg.
Petroleum & coal products
mfg.
Plastics & rubber products
mfg.
Primary metal mfg.
Printing & related support
activities
Textile mills
Textile product mills
Transportation equipment
mfg.
Wood product mfg.
Other miscellaneous mfg.

Page 9 of 10 of 2005 Instructions for Schedule C

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Principal Business or Professional Activity Codes (continued)
Chemical Manufacturing

Repair & Maintenance

325100
325500

811120

325300
325410
325200
325600
325900

Basic chemical mfg.
Paint, coating, & adhesive
mfg.
Pesticide, fertilizer, & other
agricultural chemical mfg.
Pharmaceutical & medicine
mfg.
Resin, synthetic rubber, &
artificial & synthetic fibers &
filaments mfg.
Soap, cleaning compound, &
toilet preparation mfg.
Other chemical product &
preparation mfg.

Food Manufacturing
311110
311800
311500
311400
311200
311610
311710
311300
311900

Animal food mfg.
Bakeries & tortilla mfg.
Dairy product mfg.
Fruit & vegetable preserving
& speciality food mfg.
Grain & oilseed milling
Animal slaughtering &
processing
Seafood product preparation
& packaging
Sugar & confectionery
product mfg.
Other food mfg. (including
coffee, tea, flavorings, &
seasonings)

Leather & Allied Product
Manufacturing
316210
316110
316990

Footwear mfg. (including
leather, rubber, & plastics)
Leather & hide tanning &
finishing
Other leather & allied product
mfg.

Nonmetallic Mineral Product
Manufacturing
327300
327100
327210
327400
327900

Cement & concrete product
mfg.
Clay product & refractory
mfg.
Glass & glass product mfg.
Lime & gypsum product mfg.
Other nonmetallic mineral
product mfg.

Mining
212110
212200
212300
211110
213110

Coal mining
Metal ore mining
Nonmetallic mineral mining
& quarrying
Oil & gas extraction
Support activities for mining

Other Services
Personal & Laundry Services
812111
812112
812220
812310
812320

812210
812330
812113
812930
812910
812920
812190
812990

Barber shops
Beauty salons
Cemeteries & crematories
Coin-operated laundries &
drycleaners
Drycleaning & laundry
services (except
coin-operated) (including
laundry & drycleaning
dropoff & pickup sites)
Funeral homes & funeral
services
Linen & uniform supply
Nail salons
Parking lots & garages
Pet care (except veterinary)
services
Photofinishing
Other personal care services
(including diet & weight
reducing centers)
All other personal services

811110
811190

811310

811210
811430
811410
811420
811490

531320

Automotive body, paint,
interior, & glass repair
Automotive mechanical &
electrical repair &
maintenance
Other automotive repair &
maintenance (including oil
change & lubrication shops &
car washes)
Commercial & industrial
machinery & equipment
(except automotive &
electronic) repair &
maintenance
Electronic & precision
equipment repair &
maintenance
Footwear & leather goods
repair
Home & garden equipment &
appliance repair &
maintenance
Reupholstery & furniture
repair
Other personal & household
goods repair & maintenance

541214
541213
541219

Legal services
Offices of certified public
accountants
Payroll services
Tax preparation services
Other accounting services

541320
541370
541380

Architectural services
Building inspection services
Drafting services
Engineering services
Geophysical surveying &
mapping services
Landscape architecture
services
Surveying & mapping (except
geophysical) services
Testing laboratories

541910
541920
541700
541930
541940
541990

531100
531210

Religious, Grantmaking,
Civic, Professional, & Similar
Organizations
813000

Religious, grantmaking, civic,
professional, & similar
organizations

Hardware stores
Home centers
Lawn & garden equipment &
supplies stores
Paint & wallpaper stores
Other building materials
dealers

Clothing & Accessories
Stores
448130
448150
448140
448310
448320
448110
448210
448120
448190

Children’s & infants’ clothing
stores
Clothing accessories stores
Family clothing stores
Jewelry stores
Luggage & leather goods
stores
Men’s clothing stores
Shoe stores
Women’s clothing stores
Other clothing stores
Camera & photographic
supplies stores
Computer & software stores
Household appliance stores
Radio, television, & other
electronics stores

Food & Beverage Stores

Advertising & related services
Management, scientific, &
technical consulting services
Market research & public
opinion polling
Photographic services
Scientific research &
development services
Translation & interpretation
services
Veterinary services
All other professional,
scientific, & technical
services

Lessors of real estate
(including miniwarehouses &
self-storage units)
Offices of real estate agents
& brokers

532310
532230
532290

443120
443111
443112

Specialized design services
(including interior, industrial,
graphic, & fashion design)

Real Estate & Rental &
Leasing
Real Estate

532220

443130

Other Professional, Scientific,
& Technical Services
541800
541600

532210

Automotive equipment rental
& leasing
Commercial & industrial
machinery & equipment
rental & leasing
Consumer electronics &
appliances rental
Formal wear & costume
rental
General rental centers
Video tape & disc rental
Other consumer goods rental

446190

445310
445220
445230
445100
445210
445290

Beer, wine, & liquor stores
Fish & seafood markets
Fruit & vegetable markets
Grocery stores (including
supermarkets & convenience
stores without gas)
Meat markets
Other specialty food stores

Furniture & Home Furnishing
Stores
442110
442200

Furniture stores
Home furnishings stores

441300
441222
441221
441110
441210
441120
441229

Gasoline stations (including
convenience stores with gas)

General Merchandise Stores
452000

General merchandise stores

Health & Personal Care Stores
446120
446130
446110

C-9

Cosmetics, beauty supplies, &
perfume stores
Optical goods stores
Pharmacies & drug stores

Automotive parts, accessories,
& tire stores
Boat dealers
Motorcycle dealers
New car dealers
Recreational vehicle dealers
(including motor home &
travel trailer dealers)
Used car dealers
All other motor vehicle
dealers

Sporting Goods, Hobby,
Book, & Music Stores
451211
451120
451140
451212
451220
451130
451110

Book stores
Hobby, toy, & game stores
Musical instrument &
supplies stores
News dealers & newsstands
Prerecorded tape, compact
disc, & record stores
Sewing, needlework, & piece
goods stores
Sporting goods stores

Miscellaneous Store Retailers
453920
453110
453220
453930
453210
453910
453310
453990

Art dealers
Florists
Gift, novelty, & souvenir
stores
Manufactured (mobile) home
dealers
Office supplies & stationery
stores
Pet & pet supplies stores
Used merchandise stores
All other miscellaneous store
retailers (including tobacco,
candle, & trophy shops)

Nonstore Retailers
454112
454111
454310
454113
454210
454390

Electronic auctions
Electronic shopping
Fuel dealers
Mail-order houses
Vending machine operators
Other direct selling
establishments (including
door-to-door retailing, frozen
food plan providers, party
plan merchandisers, &
coffee-break service
providers)

Transportation &
Warehousing
481000
485510
484110
484120
485210
486000
482110
487000
485410
484200

Gasoline Stations
447100

Other health & personal care
stores

Motor Vehicle & Parts Dealers

Electronic & Appliance Stores

Computer systems design &
related services

Specialized Design Services
541400

532400

444120
444190

Computer Systems Design &
Related Services
541510

532100

444130
444110
444200

Architectural, Engineering, &
Related Services
541310
541350
541340
541330
541360

Rental & Leasing Services

Retail Trade
Building Material & Garden
Equipment & Supplies Dealers

Professional, Scientific, &
Technical Services
541100
541211

531310
531390

Offices of real estate
appraisers
Real estate property managers
Other activities related to real
estate

485300
485110
483000
485990
488000

Air transportation
Charter bus industry
General freight trucking, local
General freight trucking, long
distance
Interurban & rural bus
transportation
Pipeline transportation
Rail transportation
Scenic & sightseeing
transportation
School & employee bus
transportation
Specialized freight trucking
(including household moving
vans)
Taxi & limousine service
Urban transit systems
Water transportation
Other transit & ground
passenger transportation
Support activities for
transportation (including
motor vehicle towing)

Page 10 of 10 of 2005 Instructions for Schedule C

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Principal Business or Professional Activity Codes (continued)
Couriers & Messengers
492000

Couriers & messengers

Warehousing & Storage
Facilities
493100

Warehousing & storage
(except leases of
miniwarehouses &
self-storage units)

Utilities
221000

Utilities

Wholesale Trade
Merchant Wholesalers,
Durable Goods
423600
423200
423700

Electrical & electronic goods
Furniture & home furnishing
Hardware, & plumbing &
heating equipment & supplies

423940
423300
423800
423500
423100
423400
423930
423910
423920
423990

Jewelry, watch, precious
stone, & precious metals
Lumber & other construction
materials
Machinery, equipment, &
supplies
Metal & mineral (except
petroleum)
Motor vehicle & motor
vehicle parts & supplies
Professional & commercial
equipment & supplies
Recyclable materials
Sporting & recreational goods
& supplies
Toy & hobby goods &
supplies
Other miscellaneous durable
goods

Merchant Wholesalers,
Nondurable Goods

424700

424300

424940
424990

424800
424920
424600
424210
424500
424910
424930
424400
424950
424100

C-10

Apparel, piece goods, &
notions
Beer, wine, & distilled
alcoholic beverage
Books, periodicals, &
newspapers
Chemical & allied products
Drugs & druggists’ sundries
Farm product raw materials
Farm supplies
Flower, nursery stock, &
florists’ supplies
Grocery & related products
Paint, varnish, & supplies
Paper & paper products

Petroleum & petroleum
products
Tobacco & tobacco products
Other miscellaneous
nondurable goods

Wholesale Electronic
Markets and Agents &
Brokers
425110
425120
999999

Business to business
electronic markets
Wholesale trade agents &
brokers
Unclassified establishments
(unable to classify)