C-1 Cat. No. 24329W 1999 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. Also, use Schedule C to report wages and expenses you had as a statutory employee. 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. Small businesses and statutory employees with expenses of $2,500 or less may be able to file Schedule C-EZ instead of Schedule C. See Schedule C-EZ to find out if you qualify to file it. This activity may subject you to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more infor- mation. General Instructions Other Schedules and Forms You May Have To File Schedule A  to deduct interest, taxes, and casualty losses not related to your business. Schedule E  to report rental real estate and royalty income or (loss) that is not subject to self-employment tax. Schedule F  to report profit or (loss) from farming. Schedule SE to pay self-employment tax on income from any trade or business. Form 4562 to claim depreciation on assets placed in service in 1999, to claim amorti- zation that began in 1999, or to report in- formation 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 8271  if you are claiming or you are reporting   on   Schedule   C   or   C-EZ   any income, deduction, loss, credit, or other tax benefit from a tax shelter. Form 8594  to report certain purchases or sales of groups of assets that constitute a trade or business. Form 8824 to report like-kind exchanges. Form 8829 to claim expenses for business use of your home. 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 Form 2290 to find out if you owe this tax. Information Returns You may have to file information returns for wages paid to employees, certain payments of fees and other nonemployee compensa- tion,   interest,   rents,   royalties,   real   estate transactions, annuities, and pensions. You may also have to file an information return if  you  sold  $5,000  or  more  of  consumer products to a person on a buy-sell, deposit- commission, or other similar basis for resale. For more information, see the 1999 Instruc- tions  for  Forms  1099,  1098,  5498,  and W-2G. If you received cash of more than $10,000 in one or more related transactions in your trade or business, you may have to file Form 8300. For details, see Pub. 1544. 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.”  Instead,  enter your em- ployer identification number (EIN) on line D. Line A Describe the business or professional activ- ity that provided your principal source of income reported on line 1. If you owned more than one business, you must complete a separate Schedule C for each business. Give the general field or activity and the type of product or service. If your general field or activity is wholesale or retail trade, or services connected with production serv- ices (mining, construction, or manufactur- ing), also give the type of customer or client. For example,  “wholesale  sale of hardware to retailers”  or  “appraisal  of real estate for lending institutions.” Line D You    need    an    employer    identification number (EIN) only if you had a Keogh plan or  were  required  to  file  an  employment, excise, estate, trust, or alcohol, tobacco, and firearms tax return. If you need an EIN, file Form SS-4. If you do not have an EIN, leave line D blank. Do not enter your SSN. Line E Enter your business address. Show a street address instead of a box number. Include the suite or room number, if any. If you con- ducted 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 You  must  use  the  cash  method  on  your return unless you kept account books. If you kept   such   books,   you   can   use   the   cash method or the accrual method. However, if inventories are required, you must use the accrual method for sales and purchases. Spe- cial rules apply to long-term contracts. See Internal Revenue Code section 460 for de- tails. The method used must clearly reflect your income. If you use the  cash method,  show all items  of  taxable  income  actually  or  con- structively received during the year (in cash, property, or services). Income is construc- tively 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.