Page 256 - Individual Forms & Instructions Guide

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10. Fees and other payments received est in the partnership and didn’t perform c. You didn’t perform any services
by you for services as a director of a services for it during the year. for the company after termination and
corporation. 4. Income from real estate rentals if before the end of the year in which you
11. Recapture amounts under sections you didn’t receive the income in the received the payment.
179 and 280F that you included in gross course of a trade or business as a real es- d. You entered into a covenant not
income because the business use of the tate dealer. Report this income on to compete against the company for at
property dropped to 50% or less. Don’t Schedule E. least a 1-year period beginning on the
include amounts you recaptured on the 5. Income from farm rentals (includ- date of termination.
disposition of property. See Form 4797. ing rentals paid in crop shares) if, as e. The amount of the payment de-
12. Generally, fees you received as a landlord, you didn’t materially partici- pended primarily on policies sold by or
professional fiduciary. This may also ap- pate in the production or management of credited to your account during the last
ply to fees paid to you as a nonprofes- the production of farm products on the year of the agreement, or the extent to
sional fiduciary if the fees relate to ac- land. See Pub. 225 for details. Report which those policies remain in force for
tive participation in the operation of the this income on Form 4835. Use two some period after termination, or both.
estate's business, or the management of Forms 4835 if you and your spouse f. The amount of the payment didn’t
an estate that required extensive man- made an election to be taxed as a quali- depend to any extent on length of serv-
agement activities over a long period of fied joint venture. ice or overall earnings from services
time. 6. Payments you receive from the performed for the company (regardless
13. Gain or loss from section 1256 CRP if you are receiving social security of whether eligibility for the payment
contracts or related property by an op- benefits for retirement or disability. De- depended on length of service).
tions or commodities dealer in the nor- duct these payments on line 1b of Statutory Employee Income
mal course of dealing in or trading sec- Schedule SE.
tion 1256 contracts. 7. Dividends on shares of stock and If you were a statutory employee, don’t
Income and Losses Not interest on bonds, notes, or other evi- include the net profit or (loss) from
Schedule C, line 31, on Schedule SE,
Included in Net Earnings dence of indebtedness issued with inter- line 2. But be sure to include on line 8a
est coupons or in registered form by any
From Self-Employment corporation (including those issued by a statutory employee social security wages
government or its political subdivision), and tips from Form W-2.
1. Salaries, fees, and other income
subject to social security or Medicare if you didn’t receive the income in the Instructions for Part II
tax that you received for performing course of your trade or business as a
services as an employee, including serv- dealer in stocks or securities. Optional Methods
ices performed as an employee under the 8. Gain or loss from:
railroad retirement system. This includes a. The sale or exchange of a capital
services performed as a public official asset; How the Optional Methods Can
(except as a fee-basis government em- b. The sale, exchange, involuntary Help You
ployee as explained in item 8 under Oth- conversion, or other disposition of prop- Social security coverage. The optional
er Income and Losses Included in Net erty unless the property is stock in trade methods may give you credit toward
Earnings From Self-Employment, earli- or other property that would be includi- your social security coverage even
er). ble in inventory, or held primarily for though you have a loss or a small
2. Fees received for services per- sale to customers in the ordinary course amount of income from self-employ-
formed as a notary public. If you had no of the business; or ment.
other income subject to SE tax, enter c. Certain transactions in timber, Credits affected by earned income.
“Exempt—Notary” on Schedule 2 coal, or domestic iron ore. Using the optional methods may qualify
(Form 1040), line 4. Don’t file Sched- you to claim the earned income credit
ule SE. However, if you had other earn- 9. Net operating losses from other (EIC), additional child tax credit
ings of $400 or more subject to SE tax, years. (ACTC), or child and dependent care
enter “Exempt—Notary” and the 10. Termination payments you re- credit or give you a larger credit if your
amount of your net profit as a notary ceived as a former insurance salesperson net earnings from self-employment (de-
public from Schedule C on the dotted if all of the following conditions are termined without using the optional
line to the left of Schedule SE, line 3. met. methods) are less than $6,040. Figure
Subtract that amount from the total of a. The payment was received from the EIC, ACTC, and child and depend-
lines 1a, 1b, and 2, and enter the result an insurance company because of serv- ent care credit with and without using
on line 3. ices you performed as an insurance the optional methods to see if the op-
3. Income you received as a retired salesperson for the company. tional methods will benefit you.
partner under a written partnership plan b. The payment was received after Self-employed health insurance de-
that provides for lifelong periodic retire- termination of your agreement to per- duction. The optional methods of com-
ment payments if you had no other inter- form services for the company. puting net earnings from

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