U.S. Individual Income Tax Return

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Page 1 of 10 of 2007 Instructions for Schedule C

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Department of the Treasury
Internal Revenue Service

2007 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. An activity qualifies as a business if your
Profit or Loss
primary purpose for engaging in the activity is for income or profit and you are involved in
activity with continuity and regularity. For example, a sporadic activity or a hobby does
From Business the
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,
and (b) certain income shown on Form 1099-MISC, Miscellaneous Income. See the Instructions for Recipients (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
Revenue Code unless otherwise noted.

General Instructions

What’s New

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

Revised activity codes. Some of the princi-

pal business or professional activity codes
beginning on page C-8 have been revised
and some codes have been deleted. Be sure
to check the list before you enter your code
on line B.
Indian employment credit has been extended. The Indian employment credit has

been extended for qualified wages paid to
an employee through December 31, 2007.
Work opportunity credit and
welfare-to-work credit extended and combined. For 2007, both credits have been

combined, modified, and extended for
qualified wages paid to an employee.
Husband-wife business. Beginning in
2007, you and your spouse, if you are filing
married filing jointly, may be able to make
a joint election to be taxed as a qualified
joint venture instead of a partnership. See
Exception — Qualified joint venture under
Husband-wife business on this page.
Section 179 deduction increased. For
property placed in service in 2007, the limit
for the section 179 deduction to expense
certain depreciable business property has
been increased to $125,000. This limit will
be reduced when the total cost of section
179 property placed in service during the
tax year exceeds $500,000.
Hurricane Katrina housing credit has expired. This credit was available for lodg-

ing furnished to qualified employees
between January 1, 2006, and July 1, 2006,
and was claimed on Section B of Form
5884-A.

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 farming or 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 2007, to claim
amortization that began in 2007, 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 8826 to claim a credit for expenditures to improve access to your business
for individuals with disabilities.
• Form 8829 to claim expenses for business use of your home.
• Form 8903 to take a deduction for income from domestic production activities.

C-1
Cat. No. 24329W

• Form 8910 to claim a credit for placing a new alternative motor vehicle in service for business use.
• Form 8911 to claim a credit for placing qualified alternative fuel vehicle refueling property in service for business use.
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 — Qualified joint venture. If
you and your spouse materially participate
(see Material participation beginning on
page C-2) as the only members of a jointly
owned and operated business, and you file
a joint return for the tax year, you can make
a joint election to be taxed as a qualified
joint venture instead of a partnership. To
make this election, you must divide all
items of income, gain, loss, deduction, and
credit between you and your spouse in accordance with your respective interests in
the venture. Each of you must file a separate Schedule C or C-EZ. On each line of
your separate Schedule C or C-EZ, you
must enter your share of the applicable income, deduction, or loss.
As long as you remain qualified, your
election cannot be revoked without IRS
consent.
Exception — Community income. If
you and your spouse wholly own an unincorporated business as community property
under the community property laws of a
state, foreign country, or U.S. possession,
you can treat the business either as a sole
proprietorship (of the spouse who carried
on the business) 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.

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Single-member limited liability company
(LLC). Generally, a single-member do-

Capital Construction Fund

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.

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.

Heavy highway vehicle use tax. If you use

Additional Information

certain highway trucks, truck-trailers,
tractor-trailers, or buses in your trade or
business, you may have to pay a federal
highway motor vehicle use tax. See the Instructions for Form 2290 to find out if you
owe this tax.

See Pub. 334 for more information for
small businesses.

Specific Instructions

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
2007 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 listed 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 fee of at least $50,000.
• Certain transactions for which you
have contractual protection against disallowance of the tax benefits.
• Certain transactions resulting in a loss
of at least $2 million in any single tax year
or $4 million in any combination of tax
years. (At least $50,000 for a single tax
year if the loss arose from a foreign currency transaction defined in section
988(c)(1), whether or not the loss flows
through from an S corporation or partnership.)
• Certain transactions 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.

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.

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 2006
for which you received payment in 2007.
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, and Rev. Proc. 2006-12, 2006-3
I.R.B. 310, available at www.irs.gov/irb/
2006-03_IRB/ar14.html.

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 (see the Part III instructions on page
C-7), you must use the accrual method for
sales and purchases of inventory items.

C-2

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
tests listed on page C-3, generally includes
any work you did in connection with an ac-

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tivity 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. However, this does not apply if you
and your spouse elect to have your business
taxed as a qualified joint venture (see
Husband-wife business on page C-1).
For purposes of the passive activity
rules, you materially participated in the operation of this trade or business activity
during 2007 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
for more than 100 hours 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 ac-

tivity (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 a 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.

Line H
If you started or acquired this business in
2007, 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 2006 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. In
certain circumstances, however, gross income 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.
If you were a debtor in a chapter 11
bankruptcy case during 2007, see page 18
of the instructions for Form 1040 and page
SE-2 of the instructions for Schedule SE
(Form 1040).

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

C-3

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.
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 in the total
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 2007 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 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 2007, credit for biodiesel and renewable diesel fuels claimed
on Form 8864, credit for alcohol used as
fuel claimed on Form 6478, credit for federal tax paid on gasoline or other fuels
claimed on your 2006 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 and clean-fuel vehicle refueling
property used in your business. See Regulations section 1.179A-1 for details..
If, in 2007, you received or accrued a
credit or refund of the federal telephone
excise tax, include in income:
• The interest part of the credit or refund, and

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• The smaller of the amounts deducted
or the amount from Form 8913, line 15,
column (d), if you deducted the federal
telephone excise tax as a business expense
in one or more prior years, except to the
extent the deduction did not reduce federal
income tax in the prior year(s).
If the business use percentage of any
listed property (defined in the instructions
for line 13 on this page) decreased to 50%
or less in 2007, 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.

Part II. Expenses
Capitalizing costs of property. If you pro-

duced 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. See Pub.
538 for a discussion of uniform capitalization rules.
Exception for certain producers. Producers 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 Part III. Cost
of Goods Sold on page C-7 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
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 five or more vehicles
simultaneously in your business (such as in
fleet operations). You cannot use actual expenses for a leased vehicle if you previ-

ously used the standard mileage rate for
that vehicle.

Line 13

You can take the standard mileage rate
for 2007 only if you:
• Owned the vehicle and used 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).

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

You must file Form 1099-MISC, Miscellaneous Income, to report contract labor
payments of $600 or more during the year.
See the Instructions for Form 1099-MISC
for details.

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 or all of the cost
of certain property you bought in 2007 for
use in your business. See the Instructions
for Form 4562 and Pub. 946 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 2007;
• 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 2007, 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 beginning
on page C-3 if the business use percentage
of any listed property decreased to 50% or
less in 2007.

Line 12

Line 14

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

Deduct contributions to employee benefit
programs that are not an incidental part of a
pension or profit-sharing plan included on

If you take the standard mileage rate:

• Multiply the number of business miles

driven by 48.5 cents, and
• Add to this amount your parking fees
and tolls, and enter the total on line 9.

Do not deduct depreciation, rent or lease
payments, or your actual operating expenses.
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.
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. Contract labor includes payments
to persons you do not treat as employees
(for example, independent contractors) for
services performed for your trade or business. Do not include contract labor deducted elsewhere on your return, such as
contract labor that is includible on line 17,
21, 26, or 37. Also, do not include salaries
and wages paid to your employees, instead
see line 26.

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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.
You cannot deduct contributions you
made on your behalf as a self-employed
person for group-term life insurance.
Do not include on line 14 any contributions you made on your behalf as a self-employed person to an accident and health
plan. However, you may be able to deduct
on Form 1040, line 29, or Form 1040NR,
line 28, 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, or Form
1040NR, line 28, 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.

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 2007 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 2007 that also
applies to future years, deduct only the part
that applies to 2007.

Line 17
Include on this line fees charged by accountants and attorneys that are ordinary
and necessary expenses directly related to
operating your business.
Include fees for tax advice related to
your business and for preparation of the tax
forms related to your business. Also, include expenses incurred in resolving asserted tax deficiencies relating to your
business.
For more information, see Pub. 334 or
535.

Line 18
Include on this line your expenses for office supplies and postage.

Enter on line 20b amounts paid to rent
or lease other property, such as office space
in a building.

Line 21
Deduct the cost of incidental repairs and
maintenance that do not add to the value of
the property or appreciably prolong its life.
Do not deduct the value of your own labor.
Do not deduct amounts spent to restore or
replace property; they must be capitalized.

Line 22
Generally, you can deduct the cost of
materials and 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 materials
and supplies on hand for which you kept no
inventories or records of use, you can deduct 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.
However, if their usefulness extends substantially beyond the year they are placed
in service, you must generally recover their
costs through depreciation.

Line 19
Enter your deduction for contributions to a
pension, profit-sharing, or annuity plan, or
plan 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, or Form 1040NR, line 27, 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
is a penalty for failure to timely file these
forms.
Form 5500-EZ. File this form if you have
a one-participant retirement plan that meets
certain requirements. A one-participant
plan is a plan that covers only you (or you
and your spouse).
Form 5500. File this form for a plan that

does not meet the requirements for filing
Form 5500-EZ.
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 Leasing a Car in Pub. 463 to
figure your inclusion amount.

C-5

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. Reduce your deduction by the amount shown on Form
8846, line 4.
• Federal unemployment tax paid.
• Federal highway use tax.
Do not deduct the following.

• 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.

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• 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 24a
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.
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 convention, seminar, or similar meeting held outside the North American area
unless the meeting 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 on travel expenses, see Pub.
463.

Line 24b
Enter your total deductible business meal
and entertainment expenses. This includes
expenses for meals while traveling away
from home for business and for meals that
are business-related entertainment.
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 deducting 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 links to locations inside
and outside the continental United States.
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 75% 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.
• 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
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

C-6

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 utility expenses only 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 8844, Empowerment Zone and
Renewal Community Employment Credit,
line 2; 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.
Generally, you are required to file Form
W-2, Wage and Tax Statement, for each
employee. See the Instructions for Forms
W-2 and W-3.

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” on Schedule C, line
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

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total on both Form 1040, line 12, and
Schedule SE, line 2, or on Form 1040NR,
line 13. Estates and trusts should enter the
total on Form 1041, line 3.
Rental real estate activity. Unless you are
a qualifying real estate professional, a
rental real estate activity is a passive activity, even if you materially participated in
the activity. If you have a loss, you may
need to file Form 8582 to figure your deductible loss to enter on line 31. See the
Instructions for Form 8582.
Statutory employees. Include your net
profit or deductible loss from line 31 with
other Schedule C amounts on Form 1040,
line 12, or on Form 1040NR, line 13. 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.
Notary public. Do not enter your net profit
from line 31 on Schedule SE, line 2, unless
you are required to file Schedule SE because of other self-employment income.
See page SE-3 of the instructions for
Schedule SE.
Community income. If you and your
spouse had community income and are filing separate returns, see page SE-2 of the
instructions for Schedule SE before figuring self-employment tax.
Earned income credit. If you have a net
profit on line 31, this amount is earned income and may qualify you for the earned
income credit (EIC).

To figure your EIC, use the instructions for Form 1040, lines
66a and 66b. Complete all applicable steps plus Worksheet
B. If you are required to file Schedule SE,
remember to subtract one-half of your
self-employment tax in Part 1 of
Worksheet B.

Line 32
At-risk rules. Generally, if you have a
business loss and amounts invested in the
business for which you are not at risk, you
must 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 invested in this business for which you are
not at risk, 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)(C)
to a person (other than you) having such an
interest.
Figuring your deductible loss. If all
amounts are at risk in this business, check
box 32a. If you answered “Yes” on line G,
enter your loss on line 31. But if you answered “No” on line G, you may need to
complete Form 8582 to figure your allowable loss to enter on line 31. See the Instructions for Form 8582 for details.
If you checked box 32b, first complete
Form 6198 to determine the amount of your
deductible loss. If you answered “Yes” on
line G, enter that amount on line 31. But if
you answered “No” on line 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 2007 only because of the at-risk rules is
treated as a deduction allocable to the business in 2008.
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 $10
million or less, (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

C-7

method). Enter amounts paid for all raw
materials and merchandise during 2007 on
line 36. The amount you can deduct for
2007 is figured on line 42.
Additional information. For additional
guidance on this method of accounting for
inventoriable items, see the following.
• Pub. 538 discusses both exceptions.
• If you are a qualifying taxpayer, see
Rev. Proc. 2001-10, on page 272 of Internal
Revenue Bulletin 2001-2 at
www.irs.gov/pub/irs-irbs/irb01-02.pdf.
• If you are a qualifying small business
taxpayer, see Rev. Proc. 2002-28, on page
815 of Internal Revenue Bulletin 2002-18
at www.irs.gov/pub/irs-irbs/irb02-18.pdf.

Certain direct and indirect expenses may have to be capitalized or included in inventory.
See the instructions for Part II
beginning on page C-4. See Pub. 538 for
additional information.

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 2007, 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. For details, see
the example on page C-2 under Line F.

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 is included on
line 40 and was 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.

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Business start-up costs. If your business

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, living, 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 2007,
you must complete and attach Form 4562.
You can elect to amortize such costs as:
• 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.
• Certain expenses paid or incurred to
create or acquire a musical composition or
its copyright.
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.
For a complete list, see the Instructions
for Form 4562, Part VI.
At-risk loss deduction. Any loss from this
business that was not allowed as a deduction last year only because of the at-risk
rules is treated as a deduction allocable to
this business in 2007. For the loss to be
deductible, the amount that is “at risk” must
be increased.
Bad debts. Include debts and partial debts
from sales or services that were included in
income and are definitely known to be
worthless. If you later collect a debt that
you deducted as a bad debt, include it as
income in the year collected. For details,
see Pub. 535.

began in 2007, you can elect to deduct up to
$5,000 of certain business start-up costs.
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 2007, you must complete
and attach Form 4562.
Deduction for removing barriers to
individuals with disabilities and the elderly. You may be able to deduct up to

$15,000 of costs paid or incurred in 2007 to
remove architectural or transportation barriers to individuals with disabilities and the
elderly. However, you cannot take both the
credit (discussed on page C-1) 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. Reforestation costs are generally capital expenditures. However, for each qualified
timber property you can elect to expense up
to $10,000 ($5,000 if married filing separately) of qualifying reforestation costs
paid or incurred in 2007. This limit is increased for small timber producers with
qualified timber property located in the GO
Zone, the Rita GO Zone, or the Wilma GO
Zone. For GO Zone information, see
Pub. 4492.

Costs of making commercial buildings
energy efficient. You may be able to de-

duct part or all of the cost of modifying
existing commercial buildings to make
them energy efficient. For details, see section 179D and Notice 2006-52. You can
find Notice 2006-52 on page 1175 of Internal Revenue Bulletin 2006-26 at
www.irs.gov/irb/2006-26_IRB/ar11.html.
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.

You can elect to amortize the remaining
costs over 84 months. For amortization that
begins in 2007, you must complete and attach Form 4562.

Recordkeeping . . . . . . . . . 1 hr., 18 min.
Learning about the law or
the form . . . . . . . . . . . . . .

24 min.

The amortization election does not apply to trusts and the expense election does
not apply to estates and trusts. For details
on reforestation expenses, see Pub. 535.

Preparing the form . . . . . .

1 hr.

Copying, assembling, and
sending the form to the IRS

20 min.

GO Zone clean-up costs. You can deduct

50% of qualified GO Zone clean-up costs
paid or incurred in 2007 for the removal of
debris from, or the demolition of structures
on, real property located in the GO Zone.
The property must be held for use in a trade
or business, for the production of income,
or as inventory. The remaining 50% of
these costs must be capitalized. See Pub.
4492 for the areas included in the GO Zone.

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.

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 Rooming & boarding houses
721210 RV (recreational vehicle)
parks & recreational camps
721100 Traveler accommodation
(including hotels, motels, &
bed & breakfast inns)

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

Food Services & Drinking Places
722410 Drinking places (alcoholic
beverages)
722110 Full-service restaurants
722210 Limited-service eating places
722300 Special food services
(including food service
contractors & caterers)

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.

Administrative & Support and
Waste Management &
Remediation Services
Administrative & Support Services
561430 Business service centers
(including private mail
centers & copy shops)
561740 Carpet & upholstery cleaning
services

C-8

561440 Collection agencies
561450 Credit bureaus
561410 Document preparation
services
561300 Employment services
561710 Exterminating & pest control
services
561210 Facilities support
(management) services

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Principal Business or Professional Activity Codes (continued)
561600

Investigation & security
services
561720 Janitorial services
561730 Landscaping services
561110 Office administrative services
561420 Telephone call centers
(including telephone
answering services &
telemarketing bureaus)
561500 Travel arrangement &
reservation services
561490 Other business support
services (including
repossession services, court
reporting, & stenotype
services)
561790 Other services to buildings &
dwellings
561900 Other support services
(including packaging &
labeling services, &
convention & trade show
organizers)
Waste Management & Remediation
Services
562000 Waste management &
remediation services

Agriculture, Forestry, Hunting,
& Fishing
112900
114110
113000

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

114210
Support
Forestry
115210 Support activities for animal
production (including farriers)
115110 Support activities for crop
production (including cotton
ginning, soil preparation,
planting, & cultivating)
115310 Support activities for forestry

Arts, Entertainment, &
Recreation
Amusement, Gambling, & Recreation
Industries
713100 Amusement parks & arcades
713200 Gambling industries
713900 Other amusement &
recreation services (including
golf courses, skiing facilities,
marinas, fitness centers,
bowling centers, skating
rinks, miniature golf courses)
Museums, Historical Sites, & Similar
Institutions
712100 Museums, historical sites, &
similar institutions
Performing Arts, Spectator Sports, &
Related Industries
711410 Agents & managers for
artists, athletes, entertainers,
& other public figures
711510 Independent artists, writers, &
performers
711100 Performing arts companies
711300 Promoters of performing arts,
sports, & similar events
711210 Spectator sports (including
professional sports clubs &
racetrack operations)

Construction of Buildings
236200
236100

Nonresidential building
construction
Residential building
construction

Heavy and Civil Engineering
Construction
237310 Highway, street, & bridge
construction
237210 Land subdivision
237100 Utility system construction
237990 Other heavy & civil
engineering construction
Specialty Trade Contractors
238310 Drywall & insulation
contractors
238210 Electrical contractors
238350 Finish carpentry contractors
238330 Flooring contractors
238130 Framing carpentry contractors
238150 Glass & glazing contractors
238140 Masonry contractors
238320 Painting & wall covering
contractors
238220 Plumbing, heating & airconditioning contractors
238110 Poured concrete foundation &
structure contractors
238160 Roofing contractors
238170 Siding contractors
238910 Site preparation contractors
238120 Structural steel & precast
concrete construction
contractors
238340 Tile & terrazzo contractors
238290 Other building equipment
contractors
238390 Other building finishing
contractors
238190 Other foundation, structure, &
building exterior contractors
238990 All other specialty trade
contractors

Educational Services
611000

Educational services
(including schools, colleges,
& universities)

Health Care & Social
Assistance
Ambulatory Health Care Services
621610 Home health care services
621510 Medical & diagnostic
laboratories
621310 Offices of chiropractors
621210 Offices of dentists
621330 Offices of mental health
practitioners (except
physicians)
621320 Offices of optometrists
621340 Offices of physical,
occupational & speech
therapists, & audiologists
621111 Offices of physicians (except
mental health specialists)
621112 Offices of physicians, mental
health specialists
621391 Offices of podiatrists
621399 Offices of all other
miscellaneous health
practitioners
621400 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 Child day care services
624200 Community food & housing,
& emergency & other relief
services
624100 Individual & family services
624310 Vocational rehabilitation
services

Information
511000

Finance & Insurance
Credit Intermediation & Related
Activities
522100 Depository credit
intermediation (including
commercial banking, savings
institutions, & credit unions)
522200 Nondepository credit
intermediation (including
sales financing & consumer
lending)
522300 Activities related to credit
intermediation (including loan
brokers)
Insurance Agents, Brokers, &
Related Activities
524210 Insurance agencies &
brokerages
524290 Other insurance related
activities
Securities, Commodity Contracts, &
Other Financial Investments &
Related Activities
523140 Commodity contracts brokers
523130 Commodity contracts dealers
523110 Investment bankers &
securities dealers
523210 Securities & commodity
exchanges
523120 Securities brokers
523900 Other financial investment
activities (including
investment advice)

Publishing industries (except
Internet)
Broadcasting (except Internet) &
Telecommunications
515000 Broadcasting (except Internet)
517000 Telecommunications &
Internet service providers
Data Processing Services
518210 Data processing, hosting, &
related services
519100 Other information services
(including news syndicates &
libraries, Internet publishing
& broadcasting)
Motion Picture & Sound Recording
512100 Motion picture & video
industries (except video
rental)
512200 Sound recording industries

Manufacturing
315000
312000
334000
335000
332000
337000
333000
339110
322000
324100
326000

C-9

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.

331000
323100

Primary metal mfg.
Printing & related support
activities
313000 Textile mills
314000 Textile product mills
336000 Transportation equipment
mfg.
321000 Wood product mfg.
339900 Other miscellaneous mfg.
Chemical Manufacturing
325100 Basic chemical mfg.
325500 Paint, coating, & adhesive
mfg.
325300 Pesticide, fertilizer, & other
agricultural chemical mfg.
325410 Pharmaceutical & medicine
mfg.
325200 Resin, synthetic rubber, &
artificial & synthetic fibers &
filaments mfg.
325600 Soap, cleaning compound, &
toilet preparation mfg.
325900 Other chemical product &
preparation mfg.
Food Manufacturing
311110 Animal food mfg.
311800 Bakeries & tortilla mfg.
311500 Dairy product mfg.
311400 Fruit & vegetable preserving
& speciality food mfg.
311200 Grain & oilseed milling
311610 Animal slaughtering &
processing
311710 Seafood product preparation
& packaging
311300 Sugar & confectionery
product mfg.
311900 Other food mfg. (including
coffee, tea, flavorings, &
seasonings)
Leather & Allied Product
Manufacturing
316210 Footwear mfg. (including
leather, rubber, & plastics)
316110 Leather & hide tanning &
finishing
316990 Other leather & allied product
mfg.
Nonmetallic Mineral Product
Manufacturing
327300 Cement & concrete product
mfg.
327100 Clay product & refractory
mfg.
327210 Glass & glass product mfg.
327400 Lime & gypsum product mfg.
327900 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 Barber shops
812112 Beauty salons
812220 Cemeteries & crematories
812310 Coin-operated laundries &
drycleaners
812320 Drycleaning & laundry
services (except
coin-operated) (including
laundry & drycleaning
dropoff & pickup sites)
812210 Funeral homes & funeral
services
812330 Linen & uniform supply

Page 10 of 10 of 2007 Instructions for Schedule C

10:57 - 26-OCT-2007

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)
812113
812930
812910

Nail salons
Parking lots & garages
Pet care (except veterinary)
services
812920 Photofinishing
812190 Other personal care services
(including diet & weight
reducing centers)
812990 All other personal services
Repair & Maintenance
811120 Automotive body, paint,
interior, & glass repair
811110 Automotive mechanical &
electrical repair &
maintenance
811190 Other automotive repair &
maintenance (including oil
change & lubrication shops &
car washes)
811310 Commercial & industrial
machinery & equipment
(except automotive &
electronic) repair &
maintenance
811210 Electronic & precision
equipment repair &
maintenance
811430 Footwear & leather goods
repair
811410 Home & garden equipment &
appliance repair &
maintenance
811420 Reupholstery & furniture
repair
811490 Other personal & household
goods repair & maintenance

Professional, Scientific, &
Technical Services
541100
541211

Legal services
Offices of certified public
accountants
541214 Payroll services
541213 Tax preparation services
541219 Other accounting services
Architectural, Engineering, &
Related Services
541310 Architectural services
541350 Building inspection services
541340 Drafting services
541330 Engineering services
541360 Geophysical surveying &
mapping services
541320 Landscape architecture
services
541370 Surveying & mapping (except
geophysical) services
541380 Testing laboratories
Computer Systems Design & Related
Services
541510 Computer systems design &
related services
Specialized Design Services
541400 Specialized design services
(including interior, industrial,
graphic, & fashion design)
Other Professional, Scientific, &
Technical Services
541800 Advertising & related services
541600 Management, scientific, &
technical consulting services
541910 Market research & public
opinion polling
541920 Photographic services
541700 Scientific research &
development services
541930 Translation & interpretation
services
541940 Veterinary services

541990

All other professional,
scientific, & technical
services

Real Estate & Rental &
Leasing
Real Estate
531100 Lessors of real estate
(including miniwarehouses &
self-storage units)
531210 Offices of real estate agents
& brokers
531320 Offices of real estate
appraisers
531310 Real estate property managers
531390 Other activities related to real
estate
Rental & Leasing Services
532100 Automotive equipment rental
& leasing
532400 Commercial & industrial
machinery & equipment
rental & leasing
532210 Consumer electronics &
appliances rental
532220 Formal wear & costume
rental
532310 General rental centers
532230 Video tape & disc rental
532290 Other consumer goods rental

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

Religious, grantmaking, civic,
professional, & similar
organizations

Retail Trade
Building Material & Garden
Equipment & Supplies Dealers
444130 Hardware stores
444110 Home centers
444200 Lawn & garden equipment &
supplies stores
444120 Paint & wallpaper stores
444190 Other building materials
dealers
Clothing & Accessories Stores
448130 Children’s & infants’ clothing
stores
448150 Clothing accessories stores
448140 Family clothing stores
448310 Jewelry stores
448320 Luggage & leather goods
stores
448110 Men’s clothing stores
448210 Shoe stores
448120 Women’s clothing stores
448190 Other clothing stores
Electronic & Appliance Stores
443130 Camera & photographic
supplies stores
443120 Computer & software stores
443111 Household appliance stores
443112 Radio, television, & other
electronics stores
Food & Beverage Stores
445310 Beer, wine, & liquor stores
445220 Fish & seafood markets
445230 Fruit & vegetable markets
445100 Grocery stores (including
supermarkets & convenience
stores without gas)
445210 Meat markets
445290 Other specialty food stores
Furniture & Home Furnishing Stores
442110 Furniture stores
442200 Home furnishings stores

Gasoline Stations
447100 Gasoline stations (including
convenience stores with gas)
General Merchandise Stores
452000 General merchandise stores
Health & Personal Care Stores
446120 Cosmetics, beauty supplies, &
perfume stores
446130 Optical goods stores
446110 Pharmacies & drug stores
446190 Other health & personal care
stores
Motor Vehicle & Parts Dealers
441300 Automotive parts, accessories,
& tire stores
441222 Boat dealers
441221 Motorcycle dealers
441110 New car dealers
441210 Recreational vehicle dealers
(including motor home &
travel trailer dealers)
441120 Used car dealers
441229 All other motor vehicle
dealers
Sporting Goods, Hobby, Book, &
Music Stores
451211 Book stores
451120 Hobby, toy, & game stores
451140 Musical instrument &
supplies stores
451212 News dealers & newsstands
451220 Prerecorded tape, compact
disc, & record stores
451130 Sewing, needlework, & piece
goods stores
451110 Sporting goods stores
Miscellaneous Store Retailers
453920 Art dealers
453110 Florists
453220 Gift, novelty, & souvenir
stores
453930 Manufactured (mobile) home
dealers
453210 Office supplies & stationery
stores
453910 Pet & pet supplies stores
453310 Used merchandise stores
453990 All other miscellaneous store
retailers (including tobacco,
candle, & trophy shops)
Nonstore Retailers
454112 Electronic auctions
454111 Electronic shopping
454310 Fuel dealers
454113 Mail-order houses
454210 Vending machine operators
454390 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

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

C-10
Printed on recycled paper

484200

Specialized freight trucking
(including household moving
vans)
485300 Taxi & limousine service
485110 Urban transit systems
483000 Water transportation
485990 Other transit & ground
passenger transportation
488000 Support activities for
transportation (including
motor vehicle towing)
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 Electrical & electronic goods
423200 Furniture & home furnishing
423700 Hardware, & plumbing &
heating equipment & supplies
423940 Jewelry, watch, precious
stone, & precious metals
423300 Lumber & other construction
materials
423800 Machinery, equipment, &
supplies
423500 Metal & mineral (except
petroleum)
423100 Motor vehicle & motor
vehicle parts & supplies
423400 Professional & commercial
equipment & supplies
423930 Recyclable materials
423910 Sporting & recreational goods
& supplies
423920 Toy & hobby goods &
supplies
423990 Other miscellaneous durable
goods
Merchant Wholesalers, Nondurable
Goods
424300 Apparel, piece goods, &
notions
424800 Beer, wine, & distilled
alcoholic beverage
424920 Books, periodicals, &
newspapers
424600 Chemical & allied products
424210 Drugs & druggists’ sundries
424500 Farm product raw materials
424910 Farm supplies
424930 Flower, nursery stock, &
florists’ supplies
424400 Grocery & related products
424950 Paint, varnish, & supplies
424100 Paper & paper products
424700 Petroleum & petroleum
products
424940 Tobacco & tobacco products
424990 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)