ADMINISTRATIVE PLAN - San Antonio Housing Authority

6-I.F. BUSINESS INCOME [24 CFR 5.609(b)(2)]Annual income includes “the net income from the operation of a business or profession.Expenditures for business expansion or amortization of capital indebtedness shall not be used asdeductions in determining net income. An allowance for depreciation of assets used in a businessor profession may be deducted, based on straight-line depreciation, as provided in InternalRevenue Service regulations. Any withdrawal of cash or assets from the operation of a businessor profession will be included in income, except to the extent the withdrawal is reimbursement ofcash or assets invested in the operation by the family” [24 CFR 5.609(b)(2)].Business ExpensesNet income is “gross income less business expense” [HCV GB, p. 5-19].PHA PolicyIn order to verify the net income from a business, the PHA will view IRS and financialdocuments from prior years and use this information to anticipate the income for the next12 months.Acceptable methods of verification include:1. IRS Form 1040, including:Schedule C (Small Business)Schedule E (Rental Property Income)Schedule F (Farm Income)If accelerated depreciation was used on the tax return or financial statement, anaccountant's calculation of depreciation expense, computed using straight-linedepreciation rules.2. Audited or unaudited financial statement(s) of the business.3. Credit report or loan application.4. Documents such as manifests, appointment books, cashbooks, bank statements, andreceipts will be used as a guide for the prior six months (or lesser period if not in businessfor six months) to project income for the next 12 months. The family will be advised tomaintain these documents in the future if they are not available.5. Family's self-certification as to net income realized from the business during previousyears.Business ExpansionHUD regulations do not permit the PHA to deduct from gross income expenses for businessexpansion.PHA PolicyBusiness expansion is defined as any capital expenditures made to add new businessactivities, to expand current facilities, or to operate the business in additional locations.For example, purchase of a street sweeper by a construction business for the purpose of© Copyright 2008 Nan McKay & Associates, Inc. Page 6-12Revised/Approved 04/08/10 (Eff: 07/01/10)Unlimited copies may be made for internal use.