2004 Instructions for Form 1040 (ALL) - Supreme Law Firm
2004 Instructions for Form 1040 (ALL) - Supreme Law Firm
2004 Instructions for Form 1040 (ALL) - Supreme Law Firm
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Department of the Treasury<br />
Internal Revenue Service<br />
<strong>2004</strong> <strong>Instructions</strong> <strong>for</strong> Schedule C<br />
Profit or Loss<br />
From Business<br />
Use Schedule C (<strong>Form</strong> <strong>1040</strong>) to report income or loss from a business you operated or a<br />
profession you practiced as a sole proprietor. Also, use Schedule C to report wages and<br />
expenses you had as a statutory employee. An activity qualifies as a business if your primary<br />
purpose <strong>for</strong> engaging in the activity is <strong>for</strong> income or profit and you are involved in the<br />
activity with continuity and regularity. For example, a sporadic activity or a hobby does not<br />
qualify as a business. To report income from a nonbusiness activity, see the instructions <strong>for</strong><br />
<strong>Form</strong> <strong>1040</strong>, line 21.<br />
Small businesses and statutory employees with expenses of $5,000 or less may be able to<br />
file Schedule C-EZ instead of Schedule C. See Schedule C-EZ <strong>for</strong> details.<br />
You may be subject to state and local taxes and other requirements such as business<br />
licenses and fees. Check with your state and local governments <strong>for</strong> more in<strong>for</strong>mation.<br />
Section references are to the Internal Revenue Code.<br />
• Schedule J to figure your tax by aver- your reporting position will be treated as a<br />
What’s New<br />
aging your fishing income over the previ- conversion of the entity.<br />
ous 3 years. Doing so may reduce your tax.<br />
• The maximum amount of business ex-<br />
Single-member limited liability company<br />
• Schedule SE to pay self-employment<br />
penses you can have and qualify to file (LLC). Generally, a single-member do-<br />
tax on income from any trade or business.<br />
Schedule C-EZ is increased from $2,500 to<br />
mestic LLC is not treated as a separate en-<br />
$5,000 <strong>for</strong> <strong>2004</strong>. For other requirements • <strong>Form</strong> 4562 to claim depreciation on tity <strong>for</strong> federal income tax purposes. If you<br />
you must meet, see Schedule C-EZ.<br />
assets placed in service in <strong>2004</strong>, to claim are the sole member of a domestic LLC,<br />
amortization that began in <strong>2004</strong>, to make an file Schedule C or C-EZ (or Schedule E or<br />
• You can use up to four vehicles simul- election under section 179 to expense cer- F, if applicable). However, you can elect to<br />
taneously in your business and use the stan- tain property, or to report in<strong>for</strong>mation on treat a domestic LLC as a corporation. See<br />
dard mileage rate. For details, see the listed property. <strong>Form</strong> 8832 <strong>for</strong> details on the election and<br />
instructions <strong>for</strong> line 9 beginning on<br />
• <strong>Form</strong> 4684 to report a casualty or theft the tax treatment of a <strong>for</strong>eign LLC.<br />
page C-3.<br />
gain or loss involving property used in your<br />
• For certain business start-up costs Heavy highway vehicle use tax. If you use<br />
trade or business or income-producing<br />
paid or incurred after October 22, <strong>2004</strong>, certain highway trucks, truck-trailers,<br />
property.<br />
you can elect to deduct up to $5,000. This<br />
tractor-trailers, or buses in your trade or<br />
limit is reduced by the amount by which • <strong>Form</strong> 4797 to report sales, exchanges, business, you may have to pay a federal<br />
your start-up costs exceed $50,000. Also, and involuntary conversions (not from a highway motor vehicle use tax. See the In-<br />
the amortization period <strong>for</strong> certain business casualty or theft) of trade or business prop- structions <strong>for</strong> <strong>Form</strong> 2290 to find out if you<br />
start-up costs paid or incurred after October erty.<br />
owe this tax.<br />
22, <strong>2004</strong>, has been increased to 15 years. • <strong>Form</strong> 8271 if you are claiming or re-<br />
In<strong>for</strong>mation returns. You may have to file<br />
For details, see Pub. 535.<br />
porting on Schedule C or C-EZ any inin<strong>for</strong>mation<br />
returns <strong>for</strong> wages paid to emcome,<br />
deduction, loss, credit, or other tax<br />
• You can elect to deduct costs of cer-<br />
ployees, certain payments of fees and other<br />
tain qualified film and television produc- benefit from an interest purchased or other-<br />
nonemployee compensation, interest, rents,<br />
tions that begin after October 22, <strong>2004</strong>. For wise acquired in a tax shelter required to be<br />
royalties, real estate transactions, annuities,<br />
details, see Pub. 535.<br />
registered with the IRS.<br />
and pensions. You may also have to file an<br />
• You can elect to deduct certain <strong>for</strong>estor<br />
sales of groups of assets that constitute a more of consumer products to a person on a<br />
• <strong>Form</strong> 8594 to report certain purchases in<strong>for</strong>mation return if you sold $5,000 or<br />
ation and re<strong>for</strong>estation costs paid or intrade<br />
or business.<br />
buy-sell, deposit-commission, or other simcurred<br />
after October 22, <strong>2004</strong>, instead of<br />
amortizing them over 84 months. This elec- • <strong>Form</strong> 8824 to report like-kind ex-<br />
ilar basis <strong>for</strong> resale. For details, see the<br />
tion does not apply to estates and trusts. changes.<br />
<strong>2004</strong> General <strong>Instructions</strong> <strong>for</strong> <strong>Form</strong>s 1099,<br />
Also, the dollar limitation <strong>for</strong> amortization • <strong>Form</strong> 8829 to claim expenses <strong>for</strong> busion<br />
certain <strong>for</strong>estation and re<strong>for</strong>estation ness use of your home. If you received cash of more than<br />
1098, 5498, and W-2G.<br />
costs paid or incurred after October 22,<br />
Husband-wife business. If you and your $10,000 in one or more related transactions<br />
<strong>2004</strong>, has been eliminated. For details, see<br />
spouse jointly own and operate a business in your trade or business, you may have to<br />
Pub. 535.<br />
and share in the profits and losses, you are file <strong>Form</strong> 8300. For details, see Pub. 1544.<br />
partners in a partnership, whether or not<br />
you have a <strong>for</strong>mal partnership agreement. Reportable Transaction<br />
General <strong>Instructions</strong> Do not use Schedule C or C-EZ. Instead, Disclosure Statement<br />
file <strong>Form</strong> 1065. See Pub. 541 <strong>for</strong> more de- Use <strong>Form</strong> 8886 to disclose in<strong>for</strong>mation <strong>for</strong><br />
tails.<br />
Other Schedules and <strong>Form</strong>s<br />
each reportable transaction in which you<br />
You May Have To File<br />
Exception. If you and your spouse participated. <strong>Form</strong> 8886 must be filed <strong>for</strong><br />
wholly own an unincorporated business as each tax year that your federal income tax<br />
• Schedule A to deduct interest, taxes,<br />
community property under the community liability is affected by your participation in<br />
and casualty losses not related to your busiproperty<br />
laws of a state, <strong>for</strong>eign country, or the transaction. You may have to pay a<br />
ness.<br />
U.S. possession, you can treat the business penalty if you are required to file <strong>Form</strong><br />
• Schedule E to report rental real estate either as a sole proprietorship or a partnerand<br />
royalty income or (loss) that is not sub- ship. The only states with community prop-<br />
reportable transactions.<br />
8886 but do not do so. The following are<br />
ject to self-employment tax. erty laws are Arizona, Cali<strong>for</strong>nia, Idaho, • Any transaction that is the same as or<br />
• Schedule F to report profit or (loss) Louisiana, Nevada, New Mexico, Texas, substantially similar to tax avoidance transfrom<br />
farming.<br />
Washington, and Wisconsin. A change in actions identified by the IRS.<br />
C-1<br />
Cat. No. 24329W