U.S. Income Tax Return for Estates and Trusts

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U.S. Income Tax Return for Estates and Trusts

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TREASURY/IRS AND OMB USE ONLY DRAFT

2025

Instructions for Schedule C
(Form 1040)
Profit or Loss From Business
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments
For the latest information about developments related to
Schedule C and its instructions, such as legislation enacted after
they were published, go to IRS.gov/ScheduleC.

What's New

Energy efficient commercial buildings deduction. The
expense is now reported on line 27a.
Other expenses (from line 48). The expense is now reported
on line 27b.
Bonus depreciation. Certain qualified property acquired and
placed in service after January 19, 2025, can take a 100% bonus
depreciation. You can also elect to use the previous bonus
depreciation phase-down rates instead of 100% expensing. See
the Instructions for Form 4562 for more information.
Section 179 deduction dollar limits increased. Beginning in
2025, the maximum section 179 expense deduction is $2.5
million. This limit is reduced by the amount by which the cost of
section 179 property placed in service during the tax year
exceeds $4 million. See the Instructions for Form 4562 for more
information.
Domestic research and experimental expenditures.
Beginning in 2025, you can deduct your domestic research and
experimental expenditures as current business expenses or you
can elect to capitalize and amortize the expenditures ratable
over a period of 60 months or more. See Revenue Procedure
2025-28 for more information.
Qualified sound recording productions. You may be eligible
to deduct up to $150,000 of qualified sound recording production
costs. This applies to costs starting after July 4, 2025, but before
January 1, 2026. See section 181 for more information.
No tax on qualified tips. Beginning in 2025, you may be
eligible to take a deduction for qualified tips you received in
2025. You can’t deduct more than $25,000 of those tips. The
deduction is claimed on Schedule 1-A (Form 1040) not on your
Schedule C. See the Instructions for Schedule 1-A (Form 1040)
for more information.
No tax on qualified overtime. Beginning in 2025, if you
earned qualified overtime pay you may be eligible to deduct up
to $12,500 ($25,000 if married filing jointly) of your qualified
overtime compensation. The deduction is claimed on Schedule
1-A (Form 1040) not on your Schedule C. See the Instructions
for Schedule 1-A (Form 1040) for more information.

Nov 21, 2025

Reminders
Form 1040-SS filers and business use of home. Taxpayers
who file Form 1040-SS and claim a deduction for business use
of home will report the expense on Schedule C (Form 1040).
Filers will use Form 8829, Expenses for Business Use of Your
Home, if applicable, to figure the deduction and report the
amount on Schedule C, line 30.
Redesigned Form 1040-SS. Schedule C (Form 1040) is
available to be filed with Form 1040-SS, if applicable. It replaces
Form 1040-SS, Part IV. For additional information, see the
Instructions for Form 1040-SS.
Business meals deduction. The business meals deduction is
50%.
Reporting nontaxable Medicaid waiver payments. Certain
Medicaid waiver payments that are reported to you on Form
1099-MISC or Form 1099-NEC may be nontaxable. For
information on how to report these payments on Schedule C, see
Medicaid waiver payments, later.
Gig economy tax center. The gig (or on-demand, sharing, or
access) economy refers to an activity where people earn income
providing on-demand work, services, or goods. Go to
IRS.gov/Gig to get more information about the tax consequences
of participating in the gig economy.
Excess business loss limitation. If you report a loss on
line 31 of your Schedule C (Form 1040), you may be subject to a
business loss limitation. The disallowed loss resulting from the
limitation will not be reflected on line 31 of your Schedule C.
Instead, use Form 461 to determine the amount of your excess
business loss, which will be included as income on Schedule 1
(Form 1040), line 8p. Any disallowed loss resulting from this
limitation will be treated as a net operating loss that must be
carried forward and deducted in a subsequent year.
See Form 461 and its instructions for details on the excess
business loss limitation.
Small Business and Self-Employed (SB/SE) Tax Center. Do
you need help with a tax issue or preparing your return, or do you
need a free publication or form? SB/SE serves taxpayers who
file Form 1040 or 1040-SR, Schedules C, E, and F, or Form
2106, as well as small business taxpayers with assets under $10
million. For additional information, go to the Small Business and
Self-Employed Tax Center at IRS.gov/SmallBiz.

Instructions for Schedule C (Form 1040) (2025) Catalog Number 24329W
Department of the Treasury Internal Revenue Service www.irs.gov

DRAFT

Standard mileage rate For 2025, the standard mileage rate for
the cost of operating your car for business use is 70 cents per
mile.

No tax on car loan interest. If you are self-employed and use
your vehicle for personal and business use, you may be eligible
to take a deduction for the interest for the personal use on
Schedule 1-A (Form 1040). You can only deduct the part of the
interest expense that represents the business use of your vehicle
on Schedule C. See the Instructions for Schedule 1-A (Form
1040) for more information.

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General Instructions
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, a not-for-profit activity, or a hobby
does not qualify as a business. To report income from a
nonbusiness activity, see the Instructions for Schedule 1 (Form
1040), line 8j.

Single-member LLCs with employees. A single-member LLC
must file employment tax returns using the LLC's name and
employer identification number (EIN) rather than the owner's
name and EIN, even if the LLC is not treated as a separate entity
for federal income tax purposes.
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 go to IRS.gov/Trucker for the most recent
developments.

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.

Information returns. You may have to file information returns
for wages paid to employees, and certain payments of fees and
other nonemployee compensation, interest, rents, royalties, real
estate transactions, annuities, and pensions. See Line I, later,
and IRS.gov/Form1099 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 the Instructions for Form 8300
and IRS.gov/Pub1544. See also the IRS Form 8300 Reference
Guide, available at IRS.gov/businesses/small-businesses-selfemployed/irs-form-8300-reference-guide.

• 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.
• 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 461 to report an excess business loss.
• Form 3800 to claim any of the general business credits.
• Form 4562 to claim depreciation and amortization on assets
placed in service in 2025, to claim amortization that began in
2025, 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 apply a limitation to your loss if you have a
business loss and you have amounts invested in the business for
which you are not at risk.
• Form 6252 to report income from an installment agreement.
• Form 7205 to claim the IRC 179D deduction for qualifying
energy efficient commercial building expenses.
• Form 8582 to apply a limitation to your loss from passive
activities.
• 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 8936 to claim the commercial clean vehicle credit.
• Form 8960 to pay Net Investment Income Tax on certain
income generally from your passive activities.
• Form 8990 to determine whether your business interest
deduction is limited.
• Form 8995 or 8995-A to claim a deduction for qualified
business income.
2

E-filing Forms 1099. The Taxpayer First Act of 2019 authorized
the Department of the Treasury and the IRS to issue regulations
that reduce the 250-return e-file threshold. Treasury Decision
9972, published February 23, 2023, lowered the e-file threshold
to 10 (calculated by aggregating all information returns) effective
for information returns required to be filed after 2023. Go to
IRS.gov/filing/e-file-information-returns for e-file options.

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 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 next.
• You and your spouse wholly own the unincorporated business
as community property and you treat the business as a sole
proprietorship. See Community Income, later.
Otherwise, use Form 1065. See IRS.gov/Pub541 for information
about partnerships.
Qualified Joint Venture You and your spouse can elect to treat
an unincorporated business as a qualified joint venture instead
of a partnership if you:
• Each materially participate in the business (see Material
participation, later, in the instructions for line G);
• Are the only owners of the business; and
• File a joint return for the tax year.
Making the election will allow you to avoid the complexity of
Form 1065 but still give each of you credit for social security
earnings on which retirement benefits, disability benefits,
survivor benefits, and insurance (Medicare) benefits are based.

DRAFT

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 amounts shown on a
Form 1099, such as Form 1099-MISC, Form 1099-NEC, and
Form 1099-K. See the instructions on your Form 1099 for more
information about what to report on Schedule C.

Other Schedules and Forms You May
Have To File

DRAFT

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 Schedule E or F, if applicable)
unless you have elected to treat the domestic LLC as a
corporation. See Form 8832 for details on making this election
and for information about the tax treatment of a foreign LLC.

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In most cases, this election will not increase the total tax owed
on the joint return.
Jointly owned property. You and your spouse must operate
a business to make this election. Do not make the election for
jointly owned property that is not a trade or business.
Only businesses that are owned and operated by
spouses as co-owners (and not in the name of a state
CAUTION law entity) qualify for the election. Thus, a business
owned and operated by spouses through an LLC does not
qualify for the election of a qualified joint venture.

Revoking the election. The election can be revoked only with
the permission of the IRS. However, the election remains in
effect only for as long as you and your spouse continue to meet
the requirements to make the election. If you and your spouse
fail to meet the requirements for any year, you will need to make
a new election to be treated as a qualified joint venture in any
future year.
Employer identification number (EIN). You and your spouse
do not need to obtain an EIN to make the election. But 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 or go to IRS.gov/EIN.
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
(Form 1040). Rental real estate income is not generally included
in net earnings from self-employment subject to self-employment
tax and is generally 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.
More information. For more information on qualified joint
ventures, go to IRS.gov/QJV.

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. territory, 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 you choose to treat the business as a sole proprietorship,

report all the income and other items from the business on the
Schedule C of one spouse.
• If you choose to treat the business as a partnership, see Pub.
541.
• If both spouses elected to treat the business as a qualifying
joint venture, see Qualified Joint Venture, earlier.
States with community property laws include Arizona,
California, Idaho, Louisiana, Nevada, New Mexico, Texas,

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 don’t 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 in
published guidance.
• 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 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. See also
chapter 2 of Pub. 550.

Capital Construction Fund

Do not claim on Schedule C 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 or
1040-SR, line 15, by the amount of the deduction. Next to
line 15, 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 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, 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
trade, 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
3

DRAFT

Making the election. To make this election, divide all items of
income, gain, loss, deduction, and credit attributable to the
business between you and your spouse based on your
respective interests in the business. Each of you must file a
separate Schedule C or F (Form 1040). Enter your share of the
applicable income, deduction, or (loss) on the appropriate lines
of your separate Schedule C or F (Form 1040). Each of you may
also need to file a separate Schedule SE (Form 1040) to pay
self-employment tax. If the business was taxed as a partnership
before you made the election, the partnership will be treated as
terminating at the end of the preceding tax year. For information
on how to report the termination of the partnership, see IRS.gov/
Pub541.

Washington, and Wisconsin. See Pub. 555 for more information
about community property laws.

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instructions. For nonstore retailers, select the PBA code by the
primary product that your establishment sells. For example,
establishments primarily selling prescription and nonprescription
drugs select PBA code 456110 Pharmacies & drug retailers.

Line D

Enter on line D the 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, enter on line D the EIN that was issued to the LLC (in
the LLC's legal name) for a qualified retirement plan; to file
employment, excise, alcohol, tobacco, or firearms returns; or as
a payer of gambling winnings. If you do not have such an EIN,
leave line D blank.

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 page 1 of your tax return, you don’t have to complete
this line.

Line F

Generally, you can use the cash method, an accrual method, or
any other method permitted by the Internal Revenue Code. In all
cases, the method used must clearly reflect income. Unless you
are a small business taxpayer (defined later under Part III), you
must use an 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 made available to you without
restriction. 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 beyond 12
months or the end of the next tax year, it may not be deductible
or may be deductible only in part for the year of the payment.
See chapter 2 of Pub. 334, Tax Guide for Small Business.
For amounts includible in income and deductible as expense
under an accrual method, see Pub. 538.
To change your accounting method, you must generally file
Form 3115. You may also have to make an adjustment to prevent
amounts of income or expense from being duplicated or omitted.
This is called a section 481(a) adjustment.
Example. You change to the cash method of accounting and
choose to account for inventoriable items in the same manner as
nonincidental materials and supplies for the 2025 tax year. You
accrued sales in 2024 for which you received payment in 2025.
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 adjustment is generally taken into
account in the year of 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
4

More information. For more information about changing your
accounting method and the section 481(a) adjustment, see the
Instructions for Form 3115. Additional information is also
available in various revenue procedures. See Revenue
Procedure 2025-23 (and any subsequent revenue procedures
modifying Revenue Procedure 2025-23) for a list of automatic
changes, including a description of its effect on prior lists of
automatic changes. Revenue Procedure 2025-23 is available at
IRS.gov/irb/2025-24_IRB#REV-PROC-2025-23.

Line G

If your business activity is not a rental activity and you meet any
of the material participation tests, explained next, or the
exception for oil and gas applies, check the “Yes” box.
Otherwise, check “No.” If you check “No,” this activity is passive.
If you have a loss from a passive activity, see Limit on losses,
later. If you have a profit from the rental of property to a
nonpassive activity, see Recharacterization of Passive Income in
Pub. 925 to find out how to report the net income.
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 performed 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
in which you own an interest 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 a trade or business activity during
2025 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

DRAFT

Line E

line 6. If the net section 481(a) adjustment is negative, report it in
Part V.

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Rental of personal property. Generally, a rental activity (such
as long-term equipment leasing) is a passive activity even if you
materially participated in the activity. However, if you met any of
the five exceptions listed under Rental Activities in the
Instructions for Form 8582, the rental of the property is not
treated as a rental activity and the material participation rules
explained earlier apply.
Exception for oil and gas. If you are filing Schedule C to report
income and deductions from an oil or gas well in which you own
a working interest directly or through an entity that does not limit
your liability, check the “Yes” box. The activity of owning a
working interest is not a passive activity, regardless of your
participation.
Limit on losses. Your business activity loss may be limited if
you checked the “No” box on line G. In addition, your rental
activity loss may be limited even if you materially participated. In
general, a business activity in which you do not materially
participate or a rental activity is a passive activity and you have
to use Form 8582 to apply a limitation that may reduce the loss, if
any, that you may enter on Schedule C, line 31. For details, see
Pub. 925.
Note: Line G doesn't apply to filers of Form 1040-SS.

Line H

If you started or acquired this business in 2025, check the box on
line H. Also, check the box if you are reopening or restarting this
business after temporarily closing it, and you didn’t file a 2024
Schedule C for this business.

Line I

If you made any payment in 2025 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, a deposit-commission, or other similar
basis for resale.

The Guide to Information Returns in the 2025 General

TIP Instructions for Certain Information Returns identifies

which Forms 1099 must be filed, the amounts to report,
and the due dates for the required Forms 1099. For information,
see IRS.gov/instructions/Form1099.

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
2025, see Chapter 11 Bankruptcy Cases in the Instructions for
Form 1040 (under Income) and the Instructions for Schedule SE.

Be sure to report all income attributable to your trade or
business from all sources. You may receive one or more Forms
1099 from people who are required to provide information to the
IRS listing amounts that may be income you received as a result
of your trade or business activities. The following is a list of some
of the common Forms 1099.
• 1099-MISC. For more information about what is reported on
Form 1099-MISC, see the Instructions for Recipient included on
that form.
• 1099-NEC. For more information about what is reported on
Form 1099-NEC, see the Instructions for Recipient included on
that form.
• 1099-K. For more information about what is reported on Form
1099-K, see the Instructions for Payee included on that form and
go to IRS.gov/Gig.
Income you report on Schedule C may be qualified

TIP business income and entitle you to a deduction on Form

1040 or 1040-SR, line 13a. See Forms 8995 and 8995-A
for more information.

Line 1

Enter gross receipts from your trade or business. Be sure to
check any Forms 1099 you received for business income that
must be reported on this line.
If you received one or more Forms 1099-NEC, be sure line 1
includes amounts properly shown on your Forms 1099-NEC. If
the total amounts that were reported in box 1 of Forms
1099-NEC 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. Enter your statutory employee income from box 1 of
Form W-2 on line 1 of Schedule C 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
combine these amounts on a single Schedule C.
Note: Statutory employees information doesn’t apply to Form
1040-SS filers.

Note: Line I doesn't apply to filers of Form 1040-SS.
5

DRAFT

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 field of health, law, engineering, architecture,
accounting, actuarial science, performing arts, or consulting, or
any other trade or business in which capital is not a material
income-producing factor.
7. Based on all the facts and circumstances, you
participated in the activity on a regular, continuous, and
substantial basis for more than 100 hours during the tax year.
Your participation in managing the activity does not count in
determining if you meet this test if any person (except you) (a)
received compensation for performing management services in
connection with the activity, or (b) spent more hours during the
tax year than you spent performing management services in
connection with the activity (regardless of whether the person
was compensated for the services).

TREASURY/IRS AND OMB USE ONLY DRAFT
Qualified joint ventures should report rental real estate
income not subject to self-employment tax on
CAUTION Schedule E (Form 1040). See Qualified Joint Venture,
earlier, and the Instructions for Schedule E (Form 1040).

Medicaid waiver payments. If you are a sole proprietor in a
business of providing home care services, certain Medicaid
waiver payments you receive may be nontaxable. If you receive
Medicaid waiver payments on a Form 1099-MISC or Form
1099-NEC that are excludable from gross income under Notice
2014-7, report the full amount of the payments as income on
Schedule C, line 1. Then report the nontaxable and excludable
amount as an expense in Part V, Other Expenses, and write
“Notice 2014-7” next to the amount. These payments are
nontaxable and excludable from income. Notice 2014-7 is
available at IRS.gov/irb/2014-04_IRB#NOT-2014-7. For more
information about these payments see the related questions and
answers at Certain Medicaid Waiver Payments May Be
Excludable From Income, available at IRS.gov/individuals/
certain-medicaid-waiver-payments-may-be-excludable-fromincome
Installment sales. Generally, the installment method can’t 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
Schedule 2 (Form 1040), line 14, and enter the amount of
interest and “453(l)(3)” on the line next to the entry space.
If you use the installment method, attach a statement to your
return. Show separately for 2025 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 2

Report your sales returns and allowances as a positive number
on line 2. A sales return is a cash or credit refund you gave to
customers who returned defective, damaged, or unwanted
products. A sales allowance is a reduction in the selling price of
products, instead of a cash or credit refund.

Line 6

Report on line 6 business income not reported elsewhere in Part
I. Be sure to include amounts from the following.
• Finance reserve income.
• Scrap sales.
• Bad debts you recovered.
• Interest (such as on notes and accounts receivable).
• State gasoline or fuel tax refunds you received in 2025.
• Any amount of credit for biofuel claimed on line 3 of Form
6478.
• Credit for federal tax paid on fuels claimed on your 2024 Form
1040 or 1040-SR.
• Prizes and awards related to your trade or business.
6

If the business use percentage of any listed property (defined
under Line 13, later) dropped to 50% or less in 2025, 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 producing property and acquiring
property for resale. If you produced real or tangible personal
property or acquired real or personal property for resale, you
must generally capitalize certain expenses in inventory or other
property. These expenses include the direct costs of the property
and any indirect costs properly allocable to that property.
Reduce the amounts on lines 8 through 27a and Part V by
amounts capitalized. See Pub. 538 for a discussion of the
uniform capitalization rules.
Exception for a small business taxpayer. A small business
taxpayer (defined later under Part III) is not required to capitalize
certain expenses to inventory or other property. See Pub. 538 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, videotapes, 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 can’t 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 2025 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 0.70. For

example, 1,250 business miles driven × 0.70 = $875.00;
• 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 use your vehicle for both business and personal
purposes and you claimed a deduction in 2025 on
CAUTION Schedule 1-A (Form 1040) for the vehicle loan interest
allocable to your personal use, then you can't claim a deduction
for that same interest on Schedule C. See Schedule 1-A (Form
1040) and its instructions for more information.

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.

DRAFT

Name, image, likeness (NIL) income. If you are a
student-athlete, any monetary or financial gain, including
non-cash compensation like merchandise or gift cards, you
receive from a transaction in which you benefit from the use of
your name, image, or likeness is NIL income. Generally,
student-athletes are considered independent contractors for tax
purposes and report NIL income and related expenses as
self-employment income on Schedule C. However, report
royalties and other NIL income that is not self-employment
income on Schedule E instead.

• Amounts you received in your trade or business as shown on
Form 1099-PATR.
• Other kinds of miscellaneous business income.

TREASURY/IRS AND OMB USE ONLY DRAFT
For details, see chapter 4 of Pub. 463.
If you use your vehicle for both business and personal
purposes and you claimed a deduction in 2025 on
CAUTION Schedule 1-A (Form 1040) for the vehicle loan interest
allocable to your personal use, then you can’t claim a deduction
for that same interest on Schedule C. See Schedule 1-A (Form
1040) and its instructions for more information.

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.
1. Complete Schedule C, Part IV, 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, for each additional vehicle.
2. Complete 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).

Enter the total commissions and fees for the tax year. Do not
include commissions or fees that are capitalized or deducted
elsewhere on your return.
You must file Form 1099-NEC to report certain commissions
and fees of $600 or more during the year. See the Instructions
for Forms 1099-MISC and 1099-NEC for details.

Sales of property. Generally, commissions and other fees paid
to facilitate the sale of property must be capitalized. However, if
you are a dealer in property, enter on line 10 the commissions
and fees you paid to facilitate the sale of that property.
Note: A dealer in property is a person who regularly sells
property in the ordinary course of their trade or business.
For more information on the capitalization of commissions
and fees, see the examples under Regulations section
1.263(a)-1(e)(3).

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-NEC to report contract labor
payments of $600 or more during the year. See the Instructions
for Forms 1099-MISC and 1099-NEC for details.

Line 12

Enter your deduction for depletion on this line. If you have timber
depletion, attach Form T (Timber). See chapter 7 of Pub. 225 for
additional details.

Depletion is generally an item of tax preference under
the Alternative Minimum Tax (AMT). See section 57.

CAUTION

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

When to attach Form 4562. You must complete and attach
Form 4562 only if you are claiming:
• Depreciation on property placed in service during 2025;
• 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 2025,
see Pub. 946.
Listed property. 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.; and
• Any property used for entertainment or recreational purposes
(such as photographic, phonographic, communication, and
video recording equipment).
Exception. Listed property does not include photographic,
phonographic, communication, or video equipment used
exclusively in your trade or business or at your regular business
establishment. For purposes of this exception, 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.
Recapture. See Line 6, earlier, if the business use
percentage of any listed property dropped to 50% or less in
2025.

Line 14

Deduct contributions to employee benefit programs that are not
an incidental part of a pension or profit-sharing plan included on
line 19. Examples are accident and health plans, group-term life
insurance, and dependent care assistance programs. If you
made contributions on your behalf as a self-employed person to
a dependent care assistance program, complete Form 2441,
Parts I and III, to figure your deductible contributions to that
program.
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 Schedule 1 (Form
1040), line 17, 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 line 17,
Schedule 1, contained within the Instructions for Form 1040.
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
7

DRAFT

Line 10

life substantially beyond the tax year. You can also depreciate
improvements made to leased business property. However,
stock in trade, inventories, and land are not depreciable.
Depreciation starts when you first use the property in your
business or for the production of income. It ends when you take
the property out of service, deduct all your depreciable cost or
other basis, or no longer use the property in your business or for
the production of income. You can also elect under section 179
to expense part or all of the cost of certain property you bought
in 2025 for use in your business. See the Instructions for Form
4562 and Pub. 946 to figure the amount to enter on line 13.

TREASURY/IRS AND OMB USE ONLY DRAFT
insurance. Do not deduct amounts credited to a reserve for
self-insurance or premiums paid for a policy that pays for your
lost earnings due to sickness or disability. For details, see Pub.
334, chapter 8.

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.
Generally, you allocate interest expense by tracing how the
proceeds of the loan were used. See chapter 4 of Pub. 225,
generally, for details.

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
related to your business.
For more information, see Pub. 334.

Line 18

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

Line 19

Enter your deduction for the contributions you made for the
benefit of your employees to a pension, profit-sharing, or annuity
plan (including SEP, SIMPLE, and SARSEP plans described in
Pub. 560). If the plan included you as a self-employed person,
enter the contributions made as an employer on your behalf on
Schedule 1 (Form 1040), line 16, not on Schedule C.

Limitation on business interest. You must file Form 8990 to
deduct any interest expenses of this trade or business unless
you are a small business taxpayer (defined under Part III) or
meet one of the other filing exceptions listed in the Instructions
for Form 8990.
If you must file Form 8990, figure the limit on your business
interest expenses on Form 8990 before completing lines 16a
and 16b. Follow the instructions under How to report, later, but
report the reduced interest on lines 16a and 16b. The interest
you can't deduct this year will carry forward to next year on Form
8990.
If you are a small business taxpayer or meet one of the other
filing exceptions for Form 8990, follow the instructions under
How to report, later, and report all of your deductible interest on
lines 16a and 16b.

This deduction may be subject to limitations. For more
information on potential limitations, see Pub. 560.

How to report. If you have a mortgage on real property used in
your business, enter on line 16a the interest you paid for 2025 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, 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. Don’t include mortgage interest that
must be capitalized, for example, added to basis. See Pub. 551,
under Uniform Capitalization Rules, for details.

CAUTION

The Tax Cuts and Jobs Act, section 11043, limited the
deduction for mortgage interest paid on home equity
loans and lines of credit. See section 163(h)(3)(F).

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 2025 that also applies to future years,
deduct only the part that applies to 2025.

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 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 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 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.

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
8

DRAFT

If you use your vehicle for both business and personal
purposes and you claimed a deduction in 2025 on
CAUTION Schedule 1-A (Form 1040) for the vehicle loan interest
allocable to your personal use, then you can't claim a deduction
for that same interest on Schedule C. See Schedule 1-A (Form
1040) and its instructions for more information.

DRAFT

Line 17

TREASURY/IRS AND OMB USE ONLY DRAFT
prior tax year). However, if you had incidental materials and
supplies on hand for which you kept no inventories or records of
use, you can deduct the cost of those you actually purchased
during the tax year, provided that method clearly reflects income.
You can also deduct the cost of books, professional
instruments, equipment, etc., if you normally use them within a
year. However, if their usefulness extends substantially beyond a
year, you must generally recover their costs through
depreciation.

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 the
Instructions for Form 4562 for more information on amortization.
• 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 a state unemployment insurance fund, or
paid family and medical leave program disability benefit fund if
they are considered taxes under state law.
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 Schedule 1 (Form 1040), line 15 (but if filing Form 1040-NR,
then only when covered 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 24a

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 can’t
deduct expenses paid or incurred in connection with
employment away from home if that period of employment
exceeds 1 year. Also, you cannot deduct travel expenses for your
spouse, your dependent, or any other individual unless that
person is your employee, the travel is for a bona fide business
purpose, and the expenses would otherwise be deductible by
that person.
Do not include expenses for meals on this line. Instead, see
Line 24b, later. Do not include entertainment expenses on this
line.
Instead of keeping records of your actual incidental expenses,
you can use an optional method for deducting incidental

You can’t 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 deductible business meal expenses. This includes
expenses for meals while traveling away from home for business.
Your deductible business meal expenses are a percentage of
your actual business meal expenses or standard meal
allowance. See Amount of deduction, later, for the percentage
that applies to your actual meal expenses or standard meal
allowance. In most cases, the percentage is 50%.
Do not include entertainment expenses on this line.

Business meal expenses. You can deduct a percentage of
the actual cost of a meal if the following conditions are met.
• The meal expense was an ordinary and necessary expense in
carrying on your trade or business.
• The expense was not lavish or extravagant under the
circumstances.
• You or your employee was present at the meal.
• The meal was provided to a current or potential business
customer, client, consultant, or similar business contact.
• In the case of food or beverages provided during or at an
entertainment event, the food and beverages were purchased
separately from the entertainment, or the cost of the food and
beverages was stated separately from the cost of the
entertainment on one or more bills, invoices, or receipts.

You cannot avoid the entertainment disallowance rule by
inflating the amount charged for food and beverages.

CAUTION

See Regulations sections 1.274-11 and 1.274-12 for
examples and more information.
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 meals and
incidental expenses (M&IE) rate. You can find these rates for
locations inside and outside the continental United States by
going to the General Services Administration's website at
GSA.gov/travel/plan-book/per-diem-rates/mie-breakdown.
See chapter 2 of Pub. 463 for details on how to figure your
deduction using the standard meal allowance, including special
rules for partial days of travel. For special per diem rates and
rules of high cost locales, see Notice 2024-68, available at
IRS.gov/irb/2024-41_IRB#NOT-2024-68. Notice 2024-68
provides the rates and list of high-cost localities for the period
9

DRAFT

Line 23

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 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 under Line 24b, later).

TREASURY/IRS AND OMB USE ONLY DRAFT
October 1, 2024, to September 30, 2025. For subsequent
periods, see Notice 2025-54, available at IRS.gov/irb/
2025-41_IRB#NOT-2025-54.

Daycare providers. If you qualify as a family daycare provider,
you can use the standard meal and snack rates, instead of
actual costs, to figure the deductible cost of meals and snacks
provided to eligible children. If you receive reimbursement under
a food program of the Department of Agriculture, only deduct the
cost of food that exceeds reimbursement, if any. 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 reduced by the
amount of the following credit(s), if applicable.
• Work Opportunity Credit (Form 5884).
• Empowerment Zone Employment Credit (Form 8844).
• Credit for Employer Differential Wage Payments (Form 8932).
• Employer Credit for Paid Family and Medical Leave (Form
8994).
Do not reduce your deduction for any portion of a credit that
was passed through to you from a pass-through entity. See the
instructions for the credit form for more information.
Do not include salaries and wages deducted elsewhere on
your return or amounts paid to yourself.
If you provided taxable fringe benefits to your
employees, such as personal use of a car, do not deduct
CAUTION as wages the amount applicable to depreciation and
other expenses claimed elsewhere.

In most cases, you are required to file Form W-2 for each
employee. See the General Instructions for Forms W-2 and W-3.

Energy efficient commercial buildings deduction. You may
be able to deduct part or all of the expenses of modifying an
existing commercial building to make it energy efficient. For
details, see Form 7205 and its instructions. Attach Form 7205 to
your tax return.

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,
use Form 8829, or you can elect to determine the amount of the
deduction using a simplified method.
If you have a business use of another home, you can’t use the
simplified method for that home. You can use the Form 8829 to
claim expenses for business use of the other home.
For additional information about claiming this deduction, see
Pub. 587.
If you are not using the simplified method to determine

TIP 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. Instead, include the
amount from line 36 of your Form 8829 on line 30.
Simplified method. The simplified method is an alternative to
the calculation, allocation, and substantiation of actual
expenses. In most cases, you’ll 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
can’t use the simplified method to figure a deduction for rental
use of your home.
Electing to use the simplified method. You choose
whether or not to use the simplified method each tax 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 year, once made, is irrevocable. A change from using the
simplified method in one year to actual expenses in a
succeeding year, or vice versa, 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
deduction. 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.

DRAFT

Amount of deduction. In most cases, you can deduct only
50% of your business meal expenses, including meals incurred
while away from home on business. However, for individuals
subject to the Department of Transportation (DOT) hours of
service limits, the 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 and incidentals
furnished or reimbursed to an employee if you properly treat the
expense as wages subject to withholding. You can also fully
deduct meals and incidentals provided to a nonemployee to the
extent the expenses are includible in the gross income of that
person and reported on Form 1099-NEC. See chapter 5 of Pub.
15 (Circular E), Employer’s Tax Guide, for details and other
exceptions. See also chapter 8 of Pub. 334.

Line 27a

TREASURY/IRS AND OMB USE ONLY DRAFT
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.
B.
C.
D.
E.

Enter the amount from Schedule C, line 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter any gain derived from the business use of your home and shown on Form 8949 (and included on Schedule D) or Form
4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add lines A and B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the total amount of any losses (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 business use of the home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross income limitation. Subtract line D from line C. Enter the result here and on line 1 of the simplified method
worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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 spent 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 on Schedule D) or Form
4797 that are allocable to the business in which you use your home but that are not allocable to the business use of the home. Enter the result on
line 1 of the simplified method worksheet.

Line 2. If you used the same area for the entire year, enter the smaller of the square feet you actually used or 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 or, if
applicable, the average monthly allowable square footage on this line. See Part-year use or area changes (for simplified method only), later, for more
information on how to figure your average monthly allowable square footage.
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. Because 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 in a later year for your qualified business use of this home, you will be able to include these expenses when you figure your deduction.
6a. If you didn’t file a 2024 Form 8829, your carryover of prior-year operating expenses is the amount of operating expenses
shown in Part IV of the last Form 8829, if any, that you filed to claim a deduction for business use of the home. If you filed
Form 1040-SS prior to 2025 and used a worksheet in Pub. 587 to figure your carryover of unallowed expenses, your carryover
of prior-year operating expenses is the amount of operating expenses shown on your last worksheet from Pub. 587, if any,
that you used to claim a deduction for business use of the home. This will be the amount from line 6a of the Simplified Method
Worksheet or line 41 of the Worksheet To Figure the Deduction for Business Use of Your Home in Pub. 587.
6b. If you didn’t file a 2024 Form 8829, your carryover of prior-year excess casualty losses and depreciation is the amount of
excess casualty losses and depreciation shown in Part IV of the last Form 8829, if any, that you filed to claim a deduction for
business use of the home. If you filed Form 1040-SS prior to 2025 and used a worksheet in Pub. 587 to figure your carryover
of unallowed expenses, your carryover of prior-year excess casualty losses and depreciation is the amount of excess
casualty losses and depreciation shown on your last worksheet from Pub. 587, if any, that you used to claim a deduction for
business use of the home. This will be the amount from line 6b of the Simplified Method Worksheet or line 42 of the
Worksheet To Figure the Deduction for Business Use of Your Home in Pub. 587.

DRAFT

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.

TREASURY/IRS AND OMB USE ONLY DRAFT
Keep for Your Records

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

..........

Allowable square footage for the qualified business use. Don’t enter more than 300 square feet. See the Instructions for the
Simplified Method Worksheet above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Simplified method amount
a.

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

For daycare facilities not used exclusively for business, see the instructions for line 3b of this worksheet above, and enter the
decimal amount from the Daycare Facility Worksheet; otherwise, enter 1.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b.

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

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

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- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carryover of unallowed expenses from a prior year that are not allowed in 2025. Form 1040-SS filers, see the instructions
above before completing.
a.

Operating expenses. Enter the amount from your last Form 8829, line 43 (line 42 if before 2018). See the instructions for
line 6a above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a.

Excess casualty losses and depreciation. Enter the amount from your last Form 8829, line 44 (line 43 if before 2018). See the
instructions for line 6b above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b.

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 don’t 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 don’t 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’s 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 the result.

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 the 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.

DRAFT

Simplified Method Worksheet

TREASURY/IRS AND OMB USE ONLY DRAFT
If you used your home for more than one business, you
will need to file a separate Schedule C for each
CAUTION business. Don’t combine your deductions for each
business use on a single Schedule C.

Business use of more than one home. You may have used
more than one home in your business. If you used more than one
home for the same business during 2025, you may elect to use
the simplified method for only one home; you must file a Form
8829 to claim a business use of the home deduction for any
additional home. If one or more of the homes were not used for
the entire year (for example, you moved during the year), see
Part-year use or area changes (for simplified method only), later,
and Columns (a) and (b) in the Instructions for Form 8829.

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 can’t carry over 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 carry over to the next year, you can’t 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 use actual expenses to figure your
deduction.
Carryover of actual expenses for Form 1040-SS filers. If
you filed Form 1040-SS prior to 2025 and used a worksheet in
Pub. 587 to figure your actual expenses that you could carry over
to the next year, you can't claim those expenses if you are using
the simplified method. Instead, the amount of your Operating
expenses and Excess casualty losses and depreciation from
your worksheet in Pub. 587 that were not allowed will be carried
over to the next year that you use actual expenses to figure your
deduction. The next time you claim actual expenses, you need to
file Form 8829.
Depreciation of home. You can’t 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 year is
deemed to be zero.
Although you can’t deduct any depreciation or section

TIP 179 expense for the portion of your home that is a

qualified business use because you elect to use the
simplified method, you may still claim depreciation or the section
179 expense deduction on other assets (for example, furniture
and equipment) used in the qualified business use of your home.
Figuring your allowable expenses for business use of the
home. You will figure the deduction using Form 8829 or the
Simplified Method Worksheet or both.

CAUTION

You may not use the simplified method and also file
Form 8829 for the same qualified business use of the
same home.

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. Taylor and Logan are roommates. Taylor uses 300
square feet of their home for a qualified business use. Logan
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 don’t share, Taylor and
Logan can both claim 50 of the 100 square feet or divide the 100
square feet between them in any reasonable manner. If divided
evenly, Taylor could claim 250 square feet using the simplified
method and Logan could claim 150 square feet.
Part-year use or area changes (for simplified method only).
If your qualified business use was for a portion of the tax year (for
example, a seasonal business, a business that begins during the
year, or you moved during the year) or you changed the square
footage of your qualified business use, your deduction is limited
to the average monthly allowable square footage. You figure 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 can’t take more than 300 square feet into account
for any 1 month. Additionally, if your qualified business use was
less than 15 days in a month, use -0- for that month.
Example 1. Finley files a federal income tax return on a
calendar year basis. On July 20, Finley began using 400 square
feet of the home for a qualified business use. Finley continued to
use the 400 square feet until the end of the year. Finley’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 year ((300 + 300 + 300 + 300 + 300)/12)).
Example 2. Riley files a federal income tax return on a
calendar year basis. On April 20, Riley began using 100 square
feet of the home for a qualified business use. On August 5, Riley
expanded the area of qualified business use to 350 square feet.
Riley continued to use the 350 square feet until the end of the
year. Riley’s average monthly allowable square footage is 150
square feet (100 square feet for May through July and 300
square feet for August through December divided by the number
of months in the year ((100 + 100 +100 + 300 + 300 + 300 + 300
+ 300)/12)).
Example 3. Carter files a federal income tax return on a
calendar year basis. From January 1 through July 16, Carter
used 300 square feet of the home for a qualified business use.
On July 17, Carter moved to a new home and immediately
began using 200 square feet of the new home for the same
qualified business use. Using the simplified method to deduct
expenses for the qualified business use for the previous home,
Carter’s average monthly allowable square footage is 175 square
feet (300 square feet for January through July divided by the
number of months in the year ((300 + 300 + 300 + 300 + 300 +
300 + 300)/12)). Carter also prepared Form 8829 to deduct the
actual expenses associated with the qualified business use of
the new home.
13

DRAFT

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.

Using Form 8829. Use Form 8829 to figure and claim this
deduction for a home if you are not using 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.

TREASURY/IRS AND OMB USE ONLY DRAFT
Once you have determined your allowable square footage,
enter the result on line 2 of the Simplified Method Worksheet.

If you moved during the year, your average allowable
square footage will generally be less than 300.

CAUTION

Reporting your expenses for business use of the home. If
you didn’t use the simplified method, include the amount from
line 36 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 (Form 1040),
you may deduct your mortgage interest, real estate taxes, and
casualty losses on Schedule A (Form 1040) as if you didn’t use
your home for business. You can’t deduct any excess mortgage
interest, excess real estate taxes, 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, use a Form 8829
for each home or 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 for that business.

Line 31
Figuring your net profit or loss. If your expenses (including
the expenses you report on line 30) are more than your gross
income, don’t enter your loss on line 31 until you have applied
the at-risk rules and the passive activity loss rules. To apply
these rules, follow the instructions under Line 32, later, and the
Instructions for Form 8582. After applying those rules, the
amount on line 31 will be your 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 don’t 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, don’t 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. Be 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 Form 8582 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 apply a limitation
that may reduce your loss. See the Instructions for Form 8582.
14

CAUTION

If you enter a loss on line 31, you may have an excess
business loss. Use Form 461 to figure your excess
business loss.

Individuals. Enter your net profit or loss on line 31 and
include it on Schedule 1 (Form 1040), line 3. Also, include your
net profit or loss on Schedule SE (Form 1040), line 2. However, if
you are a statutory employee or notary public, see Statutory
employees or Notary public, later.
Nonresident aliens. Enter your net profit or loss on line 31
and include it on Schedule 1 (Form 1040), line 3. You should
also include this amount on Schedule SE (Form 1040), 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
Notary public, later.
Trusts and estates. Enter the net profit or loss on line 31 and
include it on Form 1041, line 3.
Statutory employees. Enter your net profit or loss on line 31
and include it on Schedule 1 (Form 1040), line 3. However, do
not report this amount on Schedule SE (Form 1040), line 2. If
you were a statutory employee and you are required to file
Schedule SE (Form 1040) because of other self-employment
income, see the Instructions for Schedule SE (Form 1040).
Notary public. Do not enter your net profit from line 31 on
Schedule SE (Form 1040), line 2, unless you are required to file
Schedule SE (Form 1040) because you have other
self-employment income. See the Instructions for Schedule SE
(Form 1040).
You can deduct one-half of your self-employment tax on

TIP Schedule 1 (Form 1040), line 15. See the Instructions for
Schedule SE (Form 1040) for details.

Community income. If you and your spouse had community
income and are filing separate returns, see the Instructions for
Schedule SE (Form 1040) before figuring self-employment tax.
Earned income credit (EIC). If you have a net profit on line 31,
this amount is earned income and may qualify you for the EIC.
To figure your EIC, use the Instructions for Form 1040,
line 27a. Complete all applicable steps plus Worksheet
CAUTION B. If you are required to file Schedule SE (Form 1040),
remember to enter one-half of your self-employment tax on Part
1, line 1d, of Worksheet B.

Line 32
You don’t need to complete line 32 if line 7 is more than

TIP 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,
complete Form 6198 to apply a limitation that may reduce your
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) and which you are not personally responsible to
repay. However, there is an exception for certain nonrecourse

DRAFT

You can use the Area Adjustment Worksheet in Pub. 587
TIP to help you determine the allowable square footage to
enter on line 2 of the Simplified Method Worksheet.

Reporting your net profit or loss. Once you have figured your
net profit or loss, report it as follows.

TREASURY/IRS AND OMB USE ONLY DRAFT
financing borrowed by you in connection with holding real
property. See the Instructions for Form 6198 and Pub. 925.
• Cash, property, or borrowed amounts used in the business (or
contributed to the business or used to acquire the business) that
are protected against loss by a guarantee, stop-loss agreement,
or other similar arrangement (excluding casualty insurance and
insurance against tort liability).
• Amounts borrowed for use in the business from a person who
has an interest in the business other than as a creditor or who is
related under section 465(b)(3)(C) to a person (other than you)
having such an interest.
Figuring your loss. Before determining your loss, check
box 32a or 32b to indicate whether the loss from your business
activity is limited by the at-risk rules. Follow the instructions next
that apply to your box 32 activity.
Note: Line 32 doesn't apply to filers of Form 1040-SS.

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 loss to enter on line 31. The passive activity loss rules do not
apply. See Line 31, earlier, for how to report your loss.
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
passive activity loss to enter on line 31. See the Instructions for
Form 8582 for details.

CAUTION

If you checked box 32b because some investment is not
at risk and you do not attach Form 6198, the processing
of your return may be delayed.

At-risk loss deduction. Any loss from this business not
allowed for 2025 only because of the at-risk rules is treated as a
deduction allocable to the business in 2026.
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 small business taxpayers. If you are a small
business taxpayer, you can choose not to keep an inventory, but
you must still use a method of accounting for inventory that
clearly reflects income. If you choose not to keep an inventory,
you won't be treated as failing to clearly reflect income if your
method of accounting for inventory treats inventory as
nonincidental material or supplies or conforms to your financial
accounting treatment of inventories. If, however, you choose to
keep an inventory, you must generally value the inventory each

CAUTION

Certain direct and indirect expenses may have to be
capitalized or included in inventory. See Part II, earlier.
See Pub. 538 for additional information.

Line 33

Your inventories can be valued at cost, the lower of cost or
market, or any other method approved by the IRS.
Line 33 doesn't apply to filers of Form 1040-SS.

Line 35

If you are changing your method of accounting beginning with
2025, 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.

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.
Travel that meets any of the following conditions isn't
commuting; it is considered deductible business travel.
15

DRAFT

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
loss will not be reduced by the at-risk rules or the passive activity
loss rules. See Line 31, earlier, for how to report your loss.
If you answered “No” on line G, you may need to complete
Form 8582 to figure your loss to enter on line 31. See the
Instructions for Form 8582 for details.

year to determine your cost of goods sold in Part III of
Schedule C.
Small business taxpayer. You qualify as a small business
taxpayer if you (a) have average annual gross receipts of $31
million or less for the 3 prior tax years (indexed for inflation), and
(b) are not a tax shelter (as defined in section 448(d)(3)).
If your business has not been in existence for all of the
3-tax-year period used in figuring average gross receipts, base
your average on the period it has existed, and if your business
has a predecessor entity, include the gross receipts of the
predecessor entity from the 3-tax-year period when figuring
average gross receipts. If your business (or predecessor entity)
had short tax years for any of the 3-tax-year period, annualize
your business’s gross receipts for the short tax years that are
part of the 3-tax-year period.
See Pub. 538 for more information.
Treating inventory as nonincidental material or supplies.
If you account for inventories as materials and supplies that are
not incidental, you deduct the amounts paid to acquire or
produce the inventoriable items (treated as materials and
supplies) in the year in which they are first used or consumed in
your operations.
Financial accounting treatment of inventories. Your
financial accounting treatment of inventories is determined with
regard to the method of accounting you use in your applicable
financial statement (as defined in section 451(b)(3)) or, if you
don’t have an applicable financial statement, with regard to the
method of accounting you use in your books and records that
have been prepared in accordance with your accounting
procedures.
More information. For more information about this exception
for small businesses using this method of accounting for
inventoriable items, see Pub. 538.
Changing your method of accounting for inventory. If
you want to change your method of accounting for inventory, file
Form 3115. For details, see Line F, earlier.

TREASURY/IRS AND OMB USE ONLY DRAFT

• You have at least one regular work location away from your
home and the travel is to a temporary work location in the same
trade or business, regardless of the distance. Generally, a
temporary work location is one where your employment is
expected to last 1 year or less. See Pub. 463 for more details.
• The travel is to a temporary work location outside the
metropolitan area where you live and normally work.
• Your home is your principal place of business under section
280A(c)(1)(A) (for purposes of deducting expenses for business
use of your home) and the travel is to another work location in
the same trade or business, regardless of whether that location
is regular or temporary and regardless of distance.

Line 47

Specific recordkeeping rules apply to car or truck expenses. For
more information about what records you must keep, see Pub.
463.
You may maintain written evidence by using an electronic
storage system that meets certain requirements. For more
information about electronic storage systems, see Pub. 583.

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 27b. 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
can’t deduct fines or penalties paid to a government for violating
any law. For details on business expenses, see Pub. 334,
chapter 8.

Amortization. Include amortization in this part. For amortization
that begins in 2025, complete and attach Form 4562.
You can amortize such costs as:
• The cost of pollution-control facilities;
• Amounts paid for research and experimentation (see sections
174 and 174A for new provisions that impact research and
experimentation 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 2025.
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. 334, chapter 8.
Business startup costs. If your business began in 2025, you
can elect to deduct up to $5,000 of certain business startup
costs. The $5,000 limit is reduced (but not below zero) by the
amount by which your total startup costs exceed $50,000. Your
remaining startup costs can be amortized over a 180-month
period beginning with the month the business began.
For details, see IRS.gov/Newsroom/Heres-how-businessescan-deduct-startup-costs-from-their-federal-taxes. For
16

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 2025 to remove architectural or
transportation barriers to individuals with disabilities and the
elderly. However, you can’t take both a credit (on Form 8826)
and a deduction for the same expenditures.
Nontaxable Medicaid waiver payments. Include the
nontaxable amount of your Medicaid waiver payments. See
Medicaid waiver payments, earlier.
De minimis safe harbor for tangible property. Generally, you
must capitalize costs to acquire or produce real or tangible
personal property used in your trade or business, such as
buildings, equipment, or furniture. However, if you elect to use
the de minimis safe harbor for tangible property, you may deduct
de minimis amounts paid to acquire or produce certain tangible
property if these amounts are deducted by you for financial
accounting purposes or in keeping your books and records.
If you have an applicable financial statement, you may use
this safe harbor to deduct amounts paid for tangible property up
to $5,000 per item or invoice. If you don't have an applicable
financial statement, you may use the de minimis safe harbor to
deduct amounts paid for tangible property up to $2,500 per item
or invoice.
Only deduct these amounts as other expenses. Don't include
these amounts on any other line.
For details on making this election and requirements for using
the de minimis safe harbor for tangible property, see chapter 8 of
Pub. 334.
Film, television, live theatrical, and sound recording production expenses. You can elect to deduct costs of certain
qualified film or television productions, certain qualified live
theatrical productions, and certain qualified sound recording
productions. See section 181 for details.
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 2025.
You can elect to amortize the remaining costs over 84
months. For amortization that begins in 2025, complete and
attach Form 4562.
The amortization election and the expense election don’t
apply to trusts. For details on reforestation expenses, see
chapter 4 of Pub. 225.
Technology and software tools. You can deduct technology
and software tools that are ordinary and necessary expenses
directly related to operating your business. Generally, this will
include tax preparation software and subscription services paid
to manage your business. However, you can’t deduct technology
or software tools that must be depreciated or amortized. Most
computer software expenses must be capitalized and
depreciated or expensed under section 179. See Pub. 946 for
more information.
Paperwork Reduction Act Notice. We ask for the information
on Schedule C (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 control number. Books or records

DRAFT

Part V. Other Expenses. Line 48

amortization that begins in 2025, complete and attach Form
4562.

TREASURY/IRS AND OMB USE ONLY DRAFT
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.

3 hr., 36 min.
1 hr., 19 min.
1 hr., 39 min.
34 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.

DRAFT

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 1545-0074 and is shown next.

Recordkeeping . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . . . . .
Preparing the form . . . . . . . . . . . . . . . . . .
Copying, assembling, and sending the form to
the IRS . . . . . . . . . . . . . . . . . . . . . . . . .

TREASURY/IRS AND OMB USE ONLY DRAFT
Principal Business or Professional
Activity Codes
North American Industry Classification System (NAICS).
These codes for the Principal Business or
Professional Activity classify sole proprietorships by the

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, line B.

Select the category that best describes your primary
business activity (for example, Real Estate). Then select
the activity that best identifies the principal source of
your sales or receipts (for example, real estate agent).

Note: If your principal source of income is from
farming activities, you should file Schedule F.

Accommodation, Food
Services, & Drinking Places

Arts, Entertainment, &
Recreation

Accommodation
721310 Rooming & boarding houses,
dormitories, & workers' camps
721210 RV (recreational vehicle) parks &
recreational camps
721100 Traveler accommodation
(including hotels, motels, & bed
& breakfast inns)
Food Services & Drinking Places
722514 Cafeterias, grill buffets, & buffets
722410 Drinking places (alcoholic
beverages)
722511 Full-service restaurants
722513 Limited-service restaurants
722515 Snack & nonalcoholic beverage
bars
722300 Special food services (including
food service contractors &
caterers)

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)

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 Support activities for crop
production (including cotton
ginning, soil preparation,
planting, & cultivating)
115310 Support activities for forestry

Construction of Buildings
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, &
air-conditioning contractors
238110 Poured concrete foundation &
structure contractors
238160 Roofing contractors
238170 Siding contractors
238910 Site preparation contractors
238120 Structural steel & precast
concrete construction
contractors
238340 Tile & terrazzo contractors
238290 Other building equipment
contractors
238390 Other building finishing
contractors
238190 Other foundation, structure, &
building exterior contractors
238990 All other specialty trade
contractors
236200

Educational Services
611000

Educational services (including
schools, colleges, & universities)

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
523160 Commodity contracts
intermediation
523150 Investment banking & securities
intermediation
523210 Securities & commodity
exchanges
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 therapists,
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 banks, & organ
banks)
Hospitals
622000 Hospitals
Nursing & Residential Care Facilities
623000 Nursing & residential care
facilities
Social Assistance
624410 Childcare services
624200 Community food & housing &
emergency & other relief
services
624100 Individual & family services
624310 Vocational rehabilitation services

Information
Publishing Industries
513000 Publishing industries
Broadcasting & Content Providers &
Telecommunications
516000 Broadcasting & content providers
517000 Telecommunications (including
wired, wireless, satellite, cable, &
other program distribution,
resellers, agents, other
telecommunications, & internet
service providers)
Data Processing, Web Search Portals, &
Other Information Services
518210 Computing infrastructure
providers, data processing, web
hosting, & related services
519200 Web search portals, libraries,
archives, & other info. services
Motion Picture & Sound Recording
512100 Motion picture & video industries
(except video rental)
512200 Sound recording industries

Manufacturing
315000
312000
334000

Apparel mfg.
Beverage & tobacco product
mfg.
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.
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
211120
212200
211130
212300
213110

Coal mining
Crude petroleum extraction
Metal ore mining
Natural gas extraction
Nonmetallic mineral mining &
quarrying
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

DRAFT

type of activity they are engaged in to facilitate the
administration of the Internal Revenue Code. These
six-digit codes are based on the NAICS.

TREASURY/IRS AND OMB USE ONLY DRAFT

Principal Business or Professional Activity Codes (Continued)
812330
812113
812930
812910

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

Professional, Scientific, &
Technical Services
Legal services
Offices of certified public
accountants
541214 Payroll services
541213 Tax preparation services
541219 Other accounting services
Architectural, Engineering, & Related
Services
541310 Architectural services
541350 Building inspection services
541340 Drafting services
541330 Engineering services
541360 Geophysical surveying &
mapping services
541320 Landscape architecture services
541370 Surveying & mapping (except
geophysical) services
541380 Testing laboratories & services
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, public relations, &
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

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
532281 Formal wear & costume rental
532310 General rental centers
532283 Home health equipment rental
532284 Recreational goods rental
532282 Video tape & disc rental
532289 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
444140 Hardware retailers
444110 Home centers
444200 Lawn & garden equipment &
supplies retailers
444120 Paint & wallpaper retailers
444180 Other building materials dealers
Clothing & Accessories Retailers
458110 Clothing & clothing accessories
retailers
458310 Jewelry retailers
458320 Luggage & leather goods
retailers
458210 Shoe retailers
Electronic & Appliance Retailers
449210 Electronics & appliance retailers
(including computers)
Food & Beverage Retailers
445320 Beer, wine, & liquor retailers
445250 Fish & seafood retailers
445230 Fruit & vegetable retailers
445100 Grocery & convenience retailers
445240 Meat retailers
445290 Other specialty food retailers
445132 Vending machine operators
Furniture & Home Furnishings Retailers
449110 Furniture retailers
449120 Home furnishings retailers
Gasoline Stations & Fuel Dealers
457100 Gasoline stations (including
convenience stores with gas)
457210 Fuel dealers (including heating
oil & liquefied petroleum)

General Merchandise Retailers
455000 General merchandise retailers
Health & Personal Care Retailers
456120 Cosmetics, beauty supplies, &
perfume retailers
456130 Optical goods retailers
456110 Pharmacies & drug retailers
456190 Other health & personal care
retailers
Motor Vehicle & Parts Dealers
441300 Automotive parts, accessories, &
tire retailers
441222 Boat dealers
441227 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, Musical
Instrument, & Miscellaneous Retailers
459210 Book retailers & news dealers
(including newsstands)
459120 Hobby, toy, & game retailers
459140 Musical instrument, & supplies
retailers
459130 Sewing, needlework, & piece
goods retailers
459110 Sporting goods retailers
459920 Art dealers
459310 Florists
459420 Gift, novelty, & souvenir retailers
459930 Manufactured (mobile) home
dealers
459410 Office supplies & stationery
retailers
459910 Pet & pet supplies retailers
459510 Used merchandise retailers
459990 All other miscellaneous retailers
(including tobacco, candle, &
trophy retailers)
Nonstore Retailers
xx
Nonstore retailers sell all types of
merchandise using such
methods as Internet, mail-order
catalogs, interactive television, or
direct sales. These types of
Retailers should select the PBA
associated with their primary line
of products sold.
xx
For example, establishments
primarily selling prescription and
nonprescription drugs select
PBA code 456110 Pharmacies &
Drug Retailers.

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

Air transportation
Charter bus industry
General freight trucking, local
General freight trucking, long
distance
Interurban & rural bus
transportation
Pipeline transportation
Rail transportation
Scenic & sightseeing
transportation
School & employee bus
transportation
Specialized freight trucking
(including household moving
vans)

485300

Taxi, limousine, & ridesharing
service
Urban transit systems
Water transportation
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)
485110
483000
485990

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, watches, precious
stones, & 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
beverages
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 products & electronic
cigarettes
424990 Other miscellaneous nondurable
goods

Wholesale Trade Agents &
Brokers
425120

Wholesale trade agents &
brokers

999000

Unclassified establishments
(unable to classify)

DRAFT

541100
541211

541990

File Type	application/pdf
File Title	2025 Instructions for Schedule C (Form 1040)
Subject	Instructions for Schedule C (Form 1040), Profit or Loss From Business
Author	W:CAR:MP:FP
File Modified	2025-12-04
File Created	2025-11-21