Page 193 - Individual Forms & Instructions Guide

Page 6 of 20
Fileid: … /i1040schc/2022/a/xml/cycle07/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
If you had both self-employment in- • Any amount of credit for biofuel 13:32 - 25-Jan-2023
come and statutory employee income, claimed on line 3 of Form 6478. Part II. Expenses
you must file two Schedules C. You • Any amount of credit for biodiesel,
cannot combine these amounts on a sin- renewable diesel, and sustainable Capitalizing costs of producing prop-
gle Schedule C. aviation fuel claimed on line 10 of Form erty and acquiring property for re-
8864. sale. If you produced real or tangible
Qualified joint ventures should
• Credit for federal tax paid on fuels
! report rental real estate income claimed on your 2021 Form 1040 or personal property or acquired real or
CAUTION not subject to self-employment personal property for resale, you must
tax on Schedule E. See Qualified Joint 1040-SR. generally capitalize certain expenses in
Venture, earlier, and the Instructions for • Prizes and awards related to your inventory or other property. These ex-
Schedule E. trade or business. penses include the direct costs of the
• Amounts you received in your property and any indirect costs properly
trade or business as shown on Form allocable to that property. Reduce the
Installment sales. Generally, the in- 1099-PATR. amounts on lines 8 through 26 and Part
stallment method cannot be used to re- V by amounts capitalized. See Pub. 538
• The amount of any payroll tax
port income from the sale of (a) personal credit taken by an employer for qualified for a discussion of the uniform capitali-
property regularly sold under the install- paid sick leave and qualified paid family zation rules.
ment method, or (b) real property held leave under the FFCRA and the ARP.
for resale to customers. But the install- See Form 941, lines 11b, 11d, 13c, and Exception for a small business tax-
ment method can be used to report in- 13e, and Form 944, lines 8b, 8d, 10d, payer. A small business taxpayer (de-
come from sales of certain residential and 10f. You must include the full fined later under Part III) is not required
lots and timeshares if you elect to pay amount (both the refundable and to capitalize certain expenses to invento-
interest on the tax due on that income af- nonrefundable portions) of the credit for ry or other property. See Pub. 538 for
ter the year of sale. See section 453(l)(2) qualified sick and family leave wages in more details.
(B) for details. If you make this election, gross income for the tax year that
Exception for creative property. If
include the interest in the total on includes the last day of any calendar you are a freelance artist, author, or pho-
Schedule 2 (Form 1040), line 14, and quarter with respect to which a credit is
enter the amount of interest and “453(l) allowed. tographer, you may be exempt from the
capitalization rules. However, your per-
(3)” on the line next to that box. sonal efforts must have created (or rea-
If you use the installment method, at- Note. A credit is available only if the sonably be expected to create) the prop-
tach a statement to your return. Show leave was taken after March 31, 2020, erty. This exception does not apply to
separately for 2022 and the 3 preceding and before October 1, 2021, and only af- any expense related to printing, photo-
years: gross sales, cost of goods sold, ter the qualified leave wages were paid, graphic plates, motion picture films, vid-
gross profit, percentage of gross profit to which might under certain circumstan- eotapes, or similar items. These expen-
gross sales, amounts collected, and gross ces not occur until a quarter after Sep- ses are subject to the capitalization rules.
profit on amounts collected. tember 30, 2021, including quarters dur- For details, see Uniform Capitalization
ing 2022. Accordingly, all lines related Rules in Pub. 538.
Line 2 to qualified sick and family leave wages
remain on the employment tax returns Line 9
Report your sales returns and allowan- for 2022.
ces as a positive number on line 2. A You can deduct the actual expenses of
• Any amount of credit for COBRA
sales return is a cash or credit refund premium assistance. See your Form(s) operating your car or truck or take the
you gave to customers who returned de- 941 or Form 944 for 2022 for the standard mileage rate. This is true even
fective, damaged, or unwanted products. nonrefundable and refundable portions if you used your vehicle for hire (such as
A sales allowance is a reduction in the of this credit that you claimed against a taxicab). You must use actual expen-
selling price of products, instead of a your employment taxes. ses if you used five or more vehicles si-
cash or credit refund. multaneously in your business (such as
• Other kinds of miscellaneous
Line 6 business income. in fleet operations). You cannot use ac-
tual expenses for a leased vehicle if you
If the business use percentage of any
Report on line 6 business income not re- listed property (defined under Line 13, previously used the standard mileage
ported elsewhere in Part I. Be sure to in- later) dropped to 50% or less in 2022, rate for that vehicle.
clude amounts from the following. report on this line any recapture of ex- You can take the standard mileage
• Finance reserve income. cess depreciation, including any section rate for 2022 only if you:
• Scrap sales. 179 expense deduction. Use Part IV of • Owned the vehicle and used the
• Bad debts you recovered. Form 4797 to figure the recapture. Also, standard mileage rate for the first year
• Interest (such as on notes and if the business use percentage drops to you placed the vehicle in service, or
accounts receivable). 50% or less on leased listed property • Leased the vehicle and are using
• State gasoline or fuel tax refunds (other than a vehicle), include on this the standard mileage rate for the entire
you received in 2022. line any inclusion amount. See chapter 5 lease period.
of Pub. 946 to figure the amount. If you take the standard mileage rate:

C-6