U.S. Individual Income Tax Return

Department of the Treasury
Internal Revenue Service

2013 Instructions for Schedule C
Profit or Loss
From Business

Use Schedule C (Form 1040) to report income or loss from a business you operated or
a profession you practiced as a sole proprietor. An activity qualifies as a business if
your primary purpose for engaging in the activity is for income or profit and you are
involved in the activity with continuity and regularity. For example, a sporadic activity
or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21.
Also use Schedule C to report (a) wages and expenses you had as a statutory employee, (b) income and deductions of certain qualified joint ventures, and (c) certain
income shown on Form 1099-MISC, Miscellaneous Income. See the Instructions for
Recipient (back of Copy B of Form 1099-MISC) for the types of income to report on
Schedule C.
Small businesses and statutory employees with business expenses of $5,000 or less
may be able to file Schedule C-EZ instead of Schedule C. See Schedule C-EZ for details.
You may be subject to state and local taxes and other requirements such as business
licenses and fees. Check with your state and local governments for more information.

Section references are to the Internal
Revenue Code unless otherwise noted.

Schedule F (Form 1040) to report
profit or (loss) from farming.
Schedule J (Form 1040) to figure
your tax by averaging your farming or
fishing income over the previous 3
years. Doing so may reduce your tax.
Schedule SE (Form 1040) to pay
self-employment tax on income from
any trade or business.
Form 3800 to claim any of the
general business credits.
Form 4562 to claim depreciation
(including the special allowance) on
assets placed in service in 2013, to claim
amortization that began in 2013, 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 6198 to figure your
allowable loss if you have a business
loss and you have amounts invested in
the business for which you are not at
risk.
Form 8582 to figure your
allowable loss from passive activities.

Future Developments
For the latest information about developments related to Schedule C (Form
1040) and its instructions, such as legislation enacted after they were published,
go to www.irs.gov/schedulec.

What's New
Standard mileage rate. The business
standard mileage rate for 2013 is 56.5
cents per mile.
Simplified method for business use of
home deduction. The IRS now provides a simplified method to determine
your expenses for business use of a
home. For more information and to determine if you can use the simplified
method, see Line 30, later.

General Instructions
Other Schedules and Forms
You May Have To File
Schedule A (Form 1040) to deduct
interest, taxes, and casualty losses not
related to your business.
Schedule E (Form 1040) to report
rental real estate and royalty income or
(loss) that is not subject to
self-employment tax.

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Dec 09, 2013

Cat. No. 24329W

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 actual
expenses for business use of your home.
Form 8903 to take a deduction for
income from domestic production
activities.
Single-member limited liability company (LLC). Generally, a single-member domestic 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.
Single-member limited liability companies (LLCs) with employees. Single-member LLCs that are disregarded
as entities separate from their owner for
federal income tax purposes are required
to file employment tax returns using the
LLC's name and employer identification
number (EIN) rather than the LLC owner's name and EIN. For more information, see the Instructions for Form SS-4.
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 Instructions for Form 2290 to
find out if you must pay this tax and visit www.irs.gov/trucker for the most recent developments.
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. See
Line I, later, and the 2013 General Instructions for Certain Information Returns for details and other payments that
may require you to file a Form 1099.
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.

Qualified Joint Venture
If you and your spouse each materially
participate (see Material participation,
later, in the instructions for line G) as
the only members of a jointly owned
and operated business and you file a
joint return for the tax year, you can
elect to be treated as a qualified joint
venture instead of a partnership. This
election, in most cases, will not increase
the total tax owed on the joint return, but
it does give each of you credit for social
security earnings on which retirement
benefits are based and for Medicare coverage. By making the election, you will
not be required to file Form 1065 for
any year the election is in effect and will
instead report the income and deductions directly on your joint return. If you
and your spouse filed a Form 1065 for
the year prior to the election, the partnership terminates at the end of the tax
year immediately preceding the year the
election takes effect.
Note. Mere joint ownership of property
that is not a trade or business does not
qualify for the election.
Making the election. To make this
election, you must divide all items of income, gain, loss, deduction, and credit
attributable to the business between you
and your spouse in accordance with your
respective interests in the venture. Each
of you must file a separate Schedule C,
C-EZ, or F. On each line of your separate Schedule C, C-EZ, or F, you must
enter your share of the applicable in-

come, deduction, or loss. Each of you
must also file a separate Schedule SE to
pay self-employment tax, as applicable.
Once made, the election can be revoked only with the permission of the
IRS. However, the election technically
remains in effect only for as long as the
spouses filing as a qualified joint venture continue to meet the requirements
for filing the election. If the spouses fail
to meet the qualified joint venture requirements for a year, a new election
will be necessary for any future year in
which the spouses meet the requirements to be treated as a qualified joint
venture.
The election generally does not require that you and your spouse obtain an
employer identification number (EIN)
since you and your spouse will file as
sole proprietors. However, you may
need an EIN to file other returns such as
employment or excise tax returns. To
apply for an EIN, see the Instructions for
Form SS-4.
For more information on qualified
joint ventures, go to IRS.gov and enter
“qualified joint venture” in the search
box.
Rental real estate business. If you and
your spouse make the election for your
rental real estate business, you must
each report your share of income and
deductions on Schedule E. Rental real
estate income generally is not included
in net earnings from self-employment
subject to self-employment tax and generally is subject to the passive loss limitation rules. Electing qualified joint venture status does not alter the application
of the self-employment tax or the passive loss limitation rules.

Business Owned and
Operated by Spouses
Generally, if you and your spouse jointly own and operate an unincorporated
business and share in the profits and losses, you are partners in a partnership,
whether or not you have a formal partnership agreement. You generally have
to file Form 1065 instead of Schedule C
or C-EZ for your joint business activity;
however, you may not have to file Form
1065 if either of the following applies.
You and your spouse elect to be
treated as a qualified joint venture. See
Qualified Joint Venture, earlier.

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You and your spouse wholly own
the unincorporated business as community property and you treat the business as
a sole proprietorship. See Excep­
tion—community income next.
Otherwise, use Form 1065. See Pub. 541
for more details.
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 your wholly-owned, unincorporated business as a
sole proprietorship, instead of a partnership. Any change in your reporting position will be treated as a conversion of
the entity.
Report your income and deductions
as follows.
If only one spouse participates in
the business, all of the income from that
business is the self-employment earnings of the spouse who carried on the
business.
If both spouses participate, the income and deductions are allocated to the
spouses based on their distributive
shares.
If either or both you and your
spouse are partners in a partnership, see
Pub. 541.
If you and your spouse elected to
treat the business as a qualifying joint
venture, see Qualified Joint Venture,
earlier.
The only states with community
property laws are Arizona, California,
Idaho, Louisiana, Nevada, New Mexico,
Texas, Washington, and Wisconsin.

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 to you or a
related party under conditions of confidentiality for which you paid an advisor
a fee of at least $50,000.
Certain transactions for which you
or a related party 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 of interest entered into after November 1, 2006, that
are the same or substantially similar to
one of the types of transactions that the
IRS has identified by published guidance as a transaction of interest.
See the Instructions for Form 8886
for more details.

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
chapter 535 of title 46 of the United
States Code. 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.

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 the employer
identification number (EIN) issued to
the estate or trust 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 serv-

ice. 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 B
Enter on line B the six-digit code from
the Principal Business or Professional
Activity Codes chart at the end of these
instructions.

Line D
Enter on line D the employer identification number (EIN) that was issued to
you on Form SS-4. Do not enter your
SSN on this line. Do not enter another
taxpayer's EIN (for example, from any
Forms 1099-MISC that you received). If
you do not have an EIN, leave line D
blank.
You need an EIN only if you have a
qualified retirement plan or are required
to file employment, excise, alcohol, tobacco, or firearms returns, or are a payer
of gambling winnings. If you need an
EIN, see the Instructions for Form SS-4.
Single-member LLCs. If you are the
sole owner of an LLC that is not treated
as a separate entity for federal income
tax purposes, you may have an EIN that
was issued to the LLC (and in the LLC's
legal name) if you are required to file
employment tax returns and certain excise tax returns. However, you should
enter on line D only the EIN issued to
you and in your name as a sole proprietor. If you do not have such an EIN,
leave line D blank. Do not enter on line
D the EIN issued to the LLC.

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.

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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), you must use the accrual
method for sales and purchases of inventory items. 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 chapter 1
of 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
also may 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
2012 for which you received payment in
2013. 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/2006­03_IRB/
ar14.html. Also see Rev. Proc. 2006-37,
2006-38 I.R.B. 499, available at
www.irs.gov/irb/2006­38_IRB/
ar10.html.

Line G
If your business activity was not a rental
activity and you met any of the material
participation tests, explained next, or the
exception for oil and gas applies (explained later), 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, later.
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. For purposes
of the seven material participation tests
listed later, participation 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 rule 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
rule does not apply for purposes of determining whether you and your spouse
can elect to have your business treated
as a qualified joint venture instead of a
partnership (see Qualified Joint Venture,
earlier).
For purposes of the passive activity
rules, you materially participated in the
operation of this trade or business activity during 2013 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.

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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 property. Generally, a rental
activity (such as long-term equipment
leasing or rental real estate) is a passive
activity even if you materially participated in the activity. However, if you materially participated in a rental real estate
activity as a real estate professional, it is
not a passive activity. Also, 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 earlier apply.
See Activities That Are Not Passive Ac­
tivities in the Instructions for Form 8582
for the definition of a real estate professional.
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. Your loss may be limited if you checked the “No” box on line
G. In this case, you may have a loss
from a passive activity, and you may
have to use Form 8582 to figure your allowable loss, if any, to enter on Schedule C, line 31.
You can deduct losses from passive
activities in most cases only to the extent of income from passive activities.
For details, see Pub. 925.

Line H
If you started or acquired this business
in 2013, 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 2012
Schedule C or C-EZ for this business.

Line I
If you made any payment in 2013 that
would require you to file any Forms
1099, check the “Yes” box. Otherwise,
check the “No” box.
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.
The Guide to Information Returns in the 2013 General In­
structions for Certain Informa­
tion Returns identifies which Forms
1099 must be filed, the amounts to re­
port, and the due dates for the required
Forms 1099.

TIP

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 2013, see Chap­
ter 11 Bankruptcy Cases in the Instructions for Form 1040 (under Income) and
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 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.

Statutory employees. 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; as a result, 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.
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.
Qualified joint ventures should
report rental real estate in­
CAUTION
come not subject to self­em­
ployment tax on Schedule E. See Qualified Joint Venture, earlier, and the In­
structions for Schedule E.

!

Installment sales. Generally, the installment 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 60. Check box c and enter the
amount of interest and “453(l)(3)” on
the line next to that box.
If you use the installment method, attach a statement to your return. Show
separately for 2013 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

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or fuel tax refunds you received in 2013,
the amount of credit for biofuel claimed
on line 2 of Form 6478, the amount of
credit for biodiesel and renewable diesel
fuels claimed on line 8 of Form 8864,
credit for federal tax paid on fuels
claimed on your 2012 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.
If the business use percentage of any
listed property (defined in Line 13, later)
dropped to 50% or less in 2013, report
on this line any recapture of excess depreciation, including any section 179 expense deduction. Use Part IV of 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 chapter 5 of Pub. 946
to figure the amount.

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. 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 for
more details.
Exception for creative property. If
you are a freelance 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 Uniform Capitalization
Rules in Pub. 538.

Line 9
You can deduct the actual expenses of
operating your car or truck or take the
standard mileage rate. This is true even
if you used your vehicle for hire (such as
a taxicab). You must use actual expenses if 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
previously used the standard mileage
rate for that vehicle.
You can take the standard mileage
rate for 2013 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.
If you take the standard mileage rate:
Multiply the number of business
miles driven by 56.5 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, license plates, etc., and
Show depreciation on line 13 and
rent or lease payments on line 20a.
For details, see chapter 4 of 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 a statement 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 Line 13, later).

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 includible on line 17, 21, 26, or 37. Also,
do not include salaries and wages paid
to your employees; instead, see Line 26,
later.
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.

Line 12
Enter your deduction for depletion on
this line. If you have timber depletion,
attach Form T (Timber). See chapter 9
of Pub. 535 for details.

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

C-6

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 2013
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 2013;
Depreciation on listed property
(defined later), regardless of the date it
was placed in service; or
A section 179 expense deduction.
If you acquired depreciable property
for the first time in 2013, 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);
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 Line 6, earlier, if the business use
percentage of any listed property dropped to 50% or less in 2013.

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 acci-

dent 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 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, or Form 1040NR, line 29,
for details.
You must reduce your line 14 deduction by the amount of any credit for
small employer health insurance premiums determined on Form 8941. See
Form 8941 and its instructions to determine which expenses are eligible for the
credit.

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 chapter 6 of
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 chapter 4 of 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
chapter 4 of 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 2013 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 chapter 4 of 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 2013 that also
applies to future years, deduct only the
part that applies to 2013.

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.

C-7

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 28, not on Schedule C.
In most cases, 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-SF. File this form electronically with the Department of Labor (at
www.efast.dol.gov) if you have a small
plan (fewer than 100 participants in
most cases) that meets certain requirements.
Form 5500. File this form electronically with the Department of Labor (at
www.efast.dol.gov) for a plan that does
not meet the requirements for filing
Form 5500-EZ or Form 5500-SF.
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
chapter 4 of Pub. 463 to figure this
amount.
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 property's value 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.

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 a
year, you must generally recover their
costs through depreciation.

under the U.S. social security system
due to an international social security
agreement).
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 23

Line 24a

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 chapter 8 of
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.
Contributions to state unemployment insurance fund or disability benefit
fund if they are considered taxes under
state law.

Enter your expenses for lodging and
transportation connected with overnight
travel for business while away from
your tax home. In most cases, your tax
home is your main place of business, regardless of where you maintain your
family home. You 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
In most cases, 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.

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, (or
Form 1040NR, line 27, when covered

Do not include expenses for meals
and entertainment on this line. Instead,
see Line 24b, later.
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
$5 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

C-8

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 Line 24b, later).
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
chapter 1 of 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 skybox

rentals and tickets to entertainment
events. See chapters 1 and 2 of 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 chapter 1 of 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. In most cases,
you can deduct only 50% of your business meal and entertainment expenses,
including meals incurred while away
from home on business. However, for
individuals subject to the Department of
Transportation (DOT) hours of service
limits, that percentage is increased to
80% 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 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 any additional costs
you incurred for business that are more
than the base rate of 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
Employment Credit, line 2;
Form 8845, Indian Employment
Credit, line 4; and
Form 8932, Credit for Employer
Differential Wage Payments, line 2.
If you provided taxable fringe
benefits to your employees,
CAUTION
such as personal use of a car,
do not deduct as wages the amount ap­
plicable to depreciation and other ex­
penses claimed elsewhere.

!

In most cases, you are required to file
Form W-2, Wage and Tax Statement,
for each employee. See the General 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. To claim a deduction for
business use of your home, you can use
Form 8829 or you can elect to determine

C-9

the amount of the deduction using a simplified method.
For additional information about
claiming this deduction, see Pub. 587.
If you are not using the simpli­
fied method to determine the
amount of expenses you may
deduct for business use of a home, do
not complete the additional entry spaces
on line 30 for total square footage of
your home and of the part of the home
used for business. Just include the
amount from line 35 of your Form 8829
on line 30.

TIP

Simplified method. The simplified
method is an alternative to the calculation, allocation, and substantiation of actual expenses. In most cases, you will
figure your deduction by multiplying the
area (measured in square feet) used regularly and exclusively for business, regularly for daycare, or regularly for storage of inventory or product samples, by
$5. The area you use to figure your deduction cannot exceed 300 square feet.
You cannot use the simplified method to
figure a deduction for rental use of your
home.
Electing to use the simplified meth­
od. You choose whether or not to use
the simplified method each taxable year.
Make the election by using the simplified method to figure the deduction for
the qualified business use of a home on
a timely-filed, original federal income
tax return for that year. An election for a
taxable year, once made, is irrevocable.
A change from using the simplified
method in one year to actual expenses in
a succeeding taxable year, or vice­versa,
is not a change in method of accounting
and does not require the consent of the
Commissioner.
If you share your home with someone
else who uses the home for a separate
business that qualifies for this deduction,
each of you may make your own election, but not for the same portion of the
home.
If you conduct more than one business that qualifies for this deduction in
your home, your election to use the simplified method applies to all your qualified business uses of your home. You
are limited to a maximum of 300 square
feet for all of the businesses you conduct
in your home that qualify for this deduc-

tion. Allocate the actual square footage
used (up to the maximum 300 square
feet) among your qualified business uses
in any reasonable manner you choose,
but you may not allocate more square
feet to a qualified business use than you
actually use in that business.

If you used your home for
more than one business, you
CAUTION
will need to file a separate
Schedule C for each business. Do not
combine your deductions for each busi­
ness use on a single Schedule C.

!

Business use of more than one
home. You may have used more than
one home in your business (for example,
you may have moved during the year). If
you used more than one home for the
same business during 2013, you may
elect to use the simplified method for
Keep for Your Records

Simplified Method Worksheet
1.

Enter the amount of the gross income limitation. See Instructions for the Simplified Method Worksheet . . . . . . . . . . . . . . .

1.

2.

Allowable square footage for the qualified business use. Do not enter more than 300 square feet. See Instructions for the
Simplified Method Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3.

Simplified method amount
a.

Maximum allowable amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3a.

b.

For daycare facilities not used exclusively for business, enter the decimal amount from the Daycare Facility Worksheet;
otherwise, enter 1.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b.

c.

Multiply line 3a by line 3b and enter result to 2 decimal places . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3c.

4.

Multiply line 2 by line 3c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5.

Allowable expenses using the simplified method. Enter the smaller of line 1 or line 4 here and include that amount on
Schedule C, line 30. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6.

$5

Carryover of unallowed expenses from 2012 that are not allowed in 2013.
a.

Operating expenses. Enter the amount from your 2012 Form 8829, line 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a.

b.

Excess casualty losses and depreciation. Enter the amount from your 2012 Form 8829, line 43 . . . . . . . . . . . . . . . . . . . 6b.
Instructions for the Simplified Method Worksheet

Use this worksheet to figure the amount of expenses you may deduct for a qualified business use of a home if you are electing to use the simplified method for
that home. If you are not electing to use the simplified method, use Form 8829.
Line 1. If all gross income from your trade or business is from this qualified business use of your home, figure your gross income limitation as follows.
A. Enter the amount from Schedule C, line 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Enter any gain derived from the business use of your home and shown on Form 8949 (and included on Schedule D) or Form 4797 . . . .
C. Add lines A and B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Enter the loss (as a positive number) shown on Form 8949 (and included on Schedule D) or Form 4797 that are allocable to the business,
but not allocable to the use of the home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Gross income limitation. Subtract line D from line C. Enter the result here and on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.
.
.
.
.

If some of the income is from a place of business other than your home, you must first determine the part of your gross income (Schedule C, line 7, and gains
from Form 8949, Schedule D, and Form 4797) from the business use of your home. In making this determination, consider the amount of time you spend at each
location as well as other facts. After determining the part of your gross income from the business use of your home, subtract from that amount the total expenses
shown on Schedule C, line 28, plus any losses shown on Form 8949 (and included in Schedule D) or Form 4797 that are allocable to the business in which you
use your home but that are not allocable to the use of the home. Enter the result on Line 1.
Note. If you had more than one home in which you conducted this business during the year, include only the income earned and the deductions attributable to
that income during the period you owned the home for which you elected to use the simplified method.
Line 2. If you used the same area for the entire year, enter the smaller of the square feet you actually used and 300. If you and your spouse conducted the
business as a qualified joint venture, split the square feet between you and your spouse in the same manner you split your other tax attributes. If you shared space
with someone else, used the home for business for only part of the year, or the area you used changed during the year, see Figuring your allowable expenses for
business use of the home before entering an amount on this line. Do not enter more than 300 square feet on this line.
Line 3b. If your qualified business use is providing daycare, you may need to account for the time that you used the same part of your home for other purposes.
If you used the part of your home exclusively and regularly for providing daycare, enter 1.0 on line 3b. If you did not use the part of your home exclusively for
providing daycare, complete the Daycare Facility Worksheet to figure what number to enter on line 3b.
Line 6. Since you are using the simplified method this year, you cannot deduct the amounts you entered on lines 6a and 6b this year. If you file Form 8829 next
year for your qualified business use of this home, you will be able to include these expenses when you figure your deduction.

C-10

Keep for Your Records

Daycare Facility Worksheet (for simplified method)
1. Multiply days used for daycare during the year by hours used per day

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Total hours available for use during the year. See Instructions for the Daycare Facility Worksheet . . . . . . . . . . . . . 2.
3. Divide line 1 by line 2. Enter the result as a decimal amount here and on line 3b of the Simplified Method
Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
Instructions for the Daycare Facility Worksheet
Use this worksheet to figure the percentage to use on line 3b of the Simplified Method Worksheet. If you do not use the area of your home exclusively for
daycare, you must reduce the prescribed rate before figuring your deduction using the simplified method.

TIP

If you used at least 300 square feet for daycare regularly and exclusively during the year, then you do not need to complete this worksheet. This
worksheet is only needed if you did not use the allowable area exclusively for daycare.

Line 1. Enter the total number of hours the facility was used for daycare during the year.
Example. Your home is used Monday through Friday for 12 hours per day for 250 days during the year. It is also used on 50 Saturdays for 8 hours a day. Enter
3,400 hours on line 4 (3,000 hours for weekdays plus 400 hours for Saturdays).
Line 2. If you used your home for daycare during the entire year, multiply 365 days (366 for a leap year) by 24 hours, and enter the result.
If you started or stopped using your home for daycare during the year, you must prorate the number of hours based on the number of days the home was
available for daycare. Multiply 24 hours by the number of days available and enter that result.

only one home; you must file a Form
8829 to claim a business use of the
home deduction for any additional
home.
Other requirements must still be
met. You must still meet all the use requirements to claim a deduction for
business use of the home. The simplified
method is only an alternative to the calculation, allocation, and substantiation
of actual expenses. The simplified method is not an alternative to the exclusivity
and other tests that must be met in order
to qualify for this deduction. For more
information about qualifying business
uses, see Qualifying for a Deduction in
Pub. 587.
Gross
income
limitation. The
amount of your deduction is still limited
to the gross income derived from qualified business use of the home reduced
by the business deductions that are not
related to your use of the home. If this
limitation reduces the amount of your
deduction, you cannot carryover the difference to another tax year.
Carryover of actual expenses from
Form 8829. If you used Form 8829 in a
prior year, and you had actual expenses
that you could carryover to the next
year, you cannot claim those expenses if

you are using the simplified method. Instead, the actual expenses from Form
8829 that were not allowed will be carried over to the next year that you file
Form 8829 for that business use of that
home.
Depreciation of home. You cannot
deduct any depreciation (including any
additional first-year depreciation) or section 179 expense for the portion of your
home that is used in a qualified business
use if you figure the deduction for the
business use of your home using the
simplified method. The depreciation deduction allowable for that portion of the
home for that taxable year is deemed to
be zero.
Although you cannot deduct
any depreciation or section
179 expense for the portion of
your home that is a qualified business
use because you elect to use the simpli­
fied method, you may still claim depreci­
ation or the section 179 expense deduc­
tion on other assets (for example, furni­
ture and equipment) used in the quali­
fied business use of your home.

TIP

Figuring your allowable expenses for
business use of the home. You will
figure the deduction using Form 8829 or

C-11

the simplified method worksheet, or
both.
You may not use the simplified
method and also file Form
CAUTION
8829 for the same qualified
business use of the same home.

!

Using Form 8829. Use Form 8829
to figure and claim this deduction for a
home if you are not or cannot use the
simplified method for that home. For information about claiming this deduction
using Form 8829, see the Instructions
for Form 8829 and Pub. 587.
Using the simplified method. Use
the Simplified Method Worksheet in
these instructions to figure your deduction for a qualified business use of your
home if you are electing to use the simplified method for that home.
Shared use (for simplified method
only). If you share your home with
someone else who uses the home for a
separate business that also qualifies for
this deduction, you may not include the
same square feet to figure your deduction as the other person. You must allocate the shared space between you and
the other person in a reasonable manner.
Example. Kristin and Lindsey are
roommates. Kristin uses 300 square feet

of their home for a qualified business
use. Lindsey uses 200 square feet of
their home for a separate qualified business use. The qualified business uses
share 100 square feet. In addition to the
portion that they do not share, Kristin
and Lindsey can both claim 50 of the
100 square feet or divide the 100 square
feet between them in any reasonable
manner. If divided evenly, Kristin could
claim 250 square feet using the simplified method and Lindsey could claim
150 square feet.
Part­year use or area changes (for
simplified method only). If your qualified business use was for a portion of the
taxable year (for example, a seasonal
business or a business that begins during
the taxable year) or you changed the
square footage of your qualified business use, your deduction is limited to the
average monthly allowable square footage. You calculate the average monthly
allowable square footage by adding the
amount of allowable square feet you
used in each month and dividing the
sum by 12.
When determining the average
monthly allowable square footage, you
cannot take more than 300 square feet
into account for any one month. Additionally, if your qualified business use
was less than 15 days in a month, you
must use -0- for that month.
Example 1. Andy files his federal income tax return on a calendar year basis.
On July 20, he began using 400 square
feet of his home for a qualified business
use. He continued to use the 400 square
feet until the end of the year. Andy's
average monthly allowable square footage is 125 square feet (300 square feet
for August through December divided
by the number of months in the taxable
year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 +
300 + 300 + 300 + 300)/12)).
Example 2. Roland files his federal
income tax return on a calendar year basis. On April 20, he began using 100
square feet of his home for a qualified
business use. On August 5, he expanded
the area of his qualified use to 350
square feet. Roland continued to use the
350 square feet until the end of the year.
Roland's average monthly allowable
square footage is 150 square feet (100
square feet for May through July and
300 square feet for August through De-

cember divided by the number of
months in the taxable year ((0 + 0 + 0 +
0 + 100 + 100 +100 + 300 + 300 + 300
+ 300 + 300)/12)).
Once you have determined your adjusted area, enter the result on line 2 of
the Simplified Method Worksheet.
You can use the Area Adjust­
ment Worksheet in Pub. 587 to
help you determine the adjus­
ted area to enter on line 2 of the Simpli­
fied Method Worksheet.

TIP

Reporting your expenses for business
use of the home. If you did not use the
simplified method, include the amount
from line 35 of Form 8829 on line 30 of
the Schedule C you are filing for that
business.
If you used the simplified method. If
you elect to use the simplified method
for the business use of a home, complete
the additional entry spaces on line 30 for
that home only. Include the amount
from line 5 of the Simplified Method
Worksheet on line 30.
If you itemize your deductions on
Schedule A, you may deduct your mortgage interest, real estate taxes, and casualty losses on Schedule A as if you did
not use your home for business. You
cannot deduct any excess mortgage interest or excess casualty losses on
Schedule C for this home.
Use Part II of Schedule C to deduct
business expenses that are unrelated to
the qualified business use of the home
(for example, expenses for advertising,
wages, or supplies, or depreciation of
equipment or furniture).
Deduction figured on multiple
forms. If you used more than one home
for a business during the year, you may
use a Form 8829 for each home or you
may use the simplified method for one
home and Form 8829 for any other
home. Combine the amount you figured
using the simplified method and the
amounts you figured on your Forms
8829, and then enter the total on line 30
of the Schedule C you are filing for that
business.

Line 31
Figuring your net profit or allowable
loss. If your expenses (including the expenses you report on line 30) are more

C-12

than your gross income, do not enter
your loss on line 31 until you have applied the excess farm loss rules, the
at-risk rules, and the passive activity
loss rules. To apply these rules, follow
the instructions in Excess farm loss
rules, Line 32 in these instructions, and
the Instructions for Form 8582. After
applying those rules, the amount on
line 31 will be your allowable loss, and
it may be smaller than the amount you
figured by subtracting line 30 from
line 29.
If your gross income is more than
your expenses (including the expenses
you report on line 30), and you do not
have prior year unallowed passive activity losses, subtract line 30 from line 29.
The result is your net profit.
If your gross income is more than
your expenses (including the expenses
you report on line 30), and you have prior year unallowed passive activity losses, do not enter your net profit on
line 31 until you have figured the
amount of prior year unallowed passive
activity losses you may claim this year
for this activity. Use Form 8582 to figure the amount of prior year unallowed
passive activity losses you may include
on line 31. Make sure to indicate that
you are including prior year passive activity losses by entering "PAL" to the
left of the entry space.
If you checked the "No" box on line
G, see the Instructions for Form 8582;
you may need to include information
from this schedule on that form, even if
you have a net profit.
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 allowable loss. See the Instructions for Form 8582.
Excess farm loss rules. If your
Schedule C activity includes processing
a farm commodity as part of your farming business, your deductible loss from
that activity may be limited if you received certain subsidies. See the Instructions for Schedule F for a list of those
subsidies. Use one of the worksheets in
the Schedule F instructions to determine
if you have an excess farm loss. See the

Instructions for Schedule F for more details on how to complete the worksheets.
You must figure and apply your excess farm loss before figuring any limitations to your loss due to the at-risk
rules or the passive activity loss rules.
Reduce your loss by your excess farm
loss before applying the at-risk rules and
passive activity loss rules.
Reporting your net profit or allowable
loss. Once you have figured your net
profit or allowable loss, report it as follows.
Individuals. Enter your net profit or
allowable loss on line 31 and include it
on Form 1040, line 12. Also, include
your net profit or allowable loss on
Schedule SE, line 2. However, if you are
a statutory employee or notary public,
see Statutory employees or Notary pub­
lic, later.
Nonresident aliens. Enter your net
profit or allowable loss on line 31 and
include it on Form 1040NR, line 13.
You should also include this amount on
Schedule SE, line 2 if you are covered
under the U.S. social security system
due to an international social security
agreement currently in effect. See the
Instructions for Schedule SE (Form
1040) for information on international
social security agreements. However, if
you are a statutory employee or notary
public, see Statutory employees or Nota­
ry public, later.
Trusts and estates. Enter the net
profit or allowable loss on line 31 and
include it on Form 1041, line 3.
Statutory employees. Enter your net
profit or allowable loss on line 31 and
include it on Form 1040, line 12, or on
Form 1040NR, line 13. However, do not
report this amount on Schedule SE,
line 2. If you were a statutory employee
and 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 you have other
self-employment income. See the Instructions for Schedule SE.
Community income. If you and your
spouse had community income and are

filing separate returns, see 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).

Figuring your allowable loss. Before
determining your allowable loss, you
must check box 32a or 32b to determine
if the loss from your business activity is
limited by the at-risk rules. Follow the
instructions below that apply to your
box 32 activity.

To figure your EIC, use the in­
structions for Form 1040, lines
CAUTION
64a and 64b. Complete all ap­
plicable steps plus Worksheet B. If you
are required to file Schedule SE, remem­
ber to enter one­half of your self­em­
ployment tax in Part 1, line 1d, of Work­
sheet B.

All investment is at risk. If all
amounts are at risk in this business,
check box 32a. If you answered “Yes”
on line G, your remaining loss (after applying the excess farm loss rules) is your
allowable loss. The at-risk rules and the
passive activity loss rules do not apply.
See Line 31, earlier, for how to report
your allowable loss.
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.

!

Line 32
TIP

You do not need to complete
line 32 if line 7 is more than
the total of lines 28 and 30.

At-risk rules. In most cases, 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.

C-13

Some investment is not at risk. If
some investment is not at risk, check
box 32b; the at-risk rules apply to your
loss. Be sure to attach Form 6198 to
your return.
If you answered "Yes" on line G,
complete Form 6198 to figure the allowable loss to enter on line 31. The passive
activity loss rules do not apply. See
Line 31, earlier for how to report your
allowable loss.
But if you answered "No" on line G,
the passive activity loss rules may apply.
First complete Form 6198 to figure the
amount of your profit or loss for the
at-risk activity, which may include
amounts reported on other forms and
schedules, and the at-risk amount for the
activity. Follow the Instructions for
Form 6198 to determine how much of
your Schedule C loss will be allowed.
After you figure the amount of your loss
that is allowed under the at-risk rules,
you may need to complete Form 8582 to
figure the allowable loss to enter on
line 31. See the Instructions for Form
8582 for details.
If you checked box 32b be­
cause some investment is not at
CAUTION
risk and you do not attach
Form 6198, the processing of your re­
turn may be delayed.

!

At-risk loss deduction. Any loss from
this business not allowed for 2013 only
because of the at-risk rules is treated as a

deduction allocable to the business in
2014.
More information. For details, see the
Instructions for Form 6198 and Pub.
925.

Part III. Cost of
Goods Sold
In most cases, 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.
Exception for certain taxpayers. If
you are a qualifying taxpayer or a qualifying small business taxpayer (discussed
next), you can account for inventoriable
items in the same manner as materials
and supplies that are not incidental. 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
2013 on line 36. The amount you can
deduct for 2013 is figured on line 42.
Qualifying taxpayer. This 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)).
Qualifying small business taxpayer.
This 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/irs­irbs/irb02­18.pdf.

items as non-incidental materials and
supplies.
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/irs­irbs/irb01­02.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/irs­irbs/
irb02­18.pdf.
Certain direct and indirect ex­
penses may have to be capital­
CAUTION
ized or included in inventory.
See Part II, earlier. See Pub. 538 for ad­
ditional information.

!

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

Line 35
If you are changing your method of accounting beginning with 2013, 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 under Line
F, earlier.

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.

Changing accounting methods. File
Form 3115 if you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash
method or to account for inventoriable

C-14

Part IV. Information
on Your Vehicle
Line 44b
In most cases, 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
27a. 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
2013, 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; or
Goodwill and certain other intangibles.
In most cases, 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 last
year because of the at-risk rules is treated as a deduction allocable to this business in 2013.
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.
Business start-up costs. If your business began in 2013, you can elect to deduct up to $5,000 of certain business
start-up costs. The $5,000 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 chapters 7 and 8 of
Pub. 535. For amortization that begins in
2013, you must complete and attach
Form 4562.
Costs of making commercial buildings
energy efficient. You may be able to
deduct part or all of the cost of modifying existing commercial buildings to
make them energy efficient. For details,
see section 179D, Notice 2006-52, Notice 2008-40, and Notice 2012-26. Notice 2006-52, 2006-26 I.R.B. 1175, is
available at
www.irs.gov/irb/2006­26_IRB/
ar11.html. Notice 2008-40, 2008-14
I.R.B. 725, is available at
www.irs.gov/irb/2008­14_IRB/
ar12.html. Notice 2012-26, 2012-17
I.R.B. 847, is available at www.irs.gov/
irb/2012­17_IRB/ar08.html.
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
2013 to remove architectural or trans-

portation barriers to individuals with
disabilities and the elderly. However,
you cannot take both a credit (on Form
8826) and a deduction for the same expenditures.
Excess farm loss deduction. Any loss
from this business activity, which includes processing a farm commodity as
part of your farming business, that was
not allowed last year because of the excess farm loss rules is treated as a deduction allocable to this business activity in 2013.
See the Instructions for Schedule F
for a definition of farming business for
this purpose and for more information
about excess farm losses.
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 2013.
You can elect to amortize the remaining costs over 84 months. For amortization that begins in 2013, you must complete and attach Form 4562.
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
chapters 7 and 8 of Pub. 535.

Paperwork Reduction Act Notice. We
ask for the information on Schedule C
(Form 1040) and Schedule C-EZ (Form
1040) 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

C-15

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
Schedule C (Form 1040) 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 next.
Recordkeeping . . . . . . . . .
3 hr., 36 min.
Learning about the law or the
form . . . . . . . . . . . . . . .
1 hr., 19 min.
Preparing the form . . . . . .
1 hr., 39 min.
Copying, assembling, and sending
the form to the IRS . . . . . .
34 min.

The time needed to complete and file
Schedule C-EZ (Form 1040) 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 1545-1973 and is
shown next.
Recordkeeping . . . . . . . . . . .
Learning about the law or the
form . . . . . . . . . . . . . . . . .
Preparing the form . . . . . . . .
Copying, assembling, and sending the
form to the IRS . . . . . . . . . . .

45 min.
3 min.
35 min.
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.

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

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)
Food Services & Drinking Places
722514 Cafeterias & buffets
722410 Drinking places (alcoholic
beverages)
722511 Full-service restaurants
722513 Limited-service restaurants
722515 Snack & non-alcoholic beverage
bars
722300 Special food services (including
food service contractors &
caterers)

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

Animal production (including
breeding of cats and dogs)
114110 Fishing
113000 Forestry & logging (including
forest nurseries & timber tracts)
114210 Hunting & trapping
Support Activities for Agriculture &
Forestry
115210 Support activities for animal
production (including farriers)

115110

115310

six-digit codes are based on the North American
Industry Classification System (NAICS).
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
Support activities for crop
production (including cotton
ginning, soil preparation,
planting, & cultivating)
Support activities for forestry

238990

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

Nonresidential building
construction
236100 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

estate agent). Now find the six-digit code assigned to
this activity (for example, 531210, the code for offices
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.

All other specialty trade
contractors

624310

Educational Services

Information

611000

Educational services (including
schools, colleges, &
universities)

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)

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

C-16

Vocational rehabilitation
services

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

Apparel mfg.
Beverage & tobacco product
mfg.
334000 Computer & electronic product
mfg.
335000 Electrical equipment, appliance,
& component mfg.
332000 Fabricated metal product mfg.
337000 Furniture & related product mfg.
333000 Machinery mfg.
339110 Medical equipment & supplies
mfg.
322000 Paper mfg.
324100 Petroleum & coal products mfg.
326000 Plastics & rubber products mfg.
331000 Primary metal mfg.
323100 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, & dry pasta
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.

Principal Business or Professional Activity Codes (Continued)
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 drop-off & pickup
sites)
812210 Funeral homes & funeral
services
812330 Linen & uniform supply
812113 Nail salons
812930 Parking lots & garages
812910 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
541330
541360

Drafting services
Engineering services
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
443142 Electronics stores (including
audio, video, computer, &
camera stores)
443141 Household appliance 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
441228 Motorcycle, ATV, & all other
motor vehicle dealers
441110 New car dealers
441210 Recreational vehicle dealers
(including motor home & travel
trailer dealers)
441120 Used car dealers
Sporting Goods, Hobby, Book, & Music
Stores
451211 Book stores
451120 Hobby, toy, & game stores
451140 Musical instrument & supplies
stores
451212 News dealers & newsstands
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 (including heating
oil & liquefied petroleum)
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

C-17

Air transportation
Charter bus industry
General freight trucking, local
General freight trucking, long
distance

485210

Interurban & rural bus
transportation
486000 Pipeline transportation
482110 Rail transportation
487000 Scenic & sightseeing
transportation
485410 School & employee bus
transportation
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
423200 Furniture & home furnishing
423700 Hardware, & plumbing &
heating equipment & supplies
423600 Household appliances &
electrical & electronic goods
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)