Desktop: Schedule C - Business Income/Loss – Support

Schedule C (Form 1040) is used to report the income and deductions for several kinds of unincorporated business activities:

A business or profession the taxpayer operates as a sole proprietor.
A qualified joint venture.
The wages and expenses of a statutory employee.

Schedule C is a two-page form. The second page has three parts reporting (a) information regarding inventory and cost of goods sold, (b) information about the vehicle if using standard mileage, and (c) itemized other expenses. If none of those things apply to the business, the second page isn't produced.

Creating Schedule C in TaxSlayer Pro

From the Main Menu of the individual tax return select:

Income
Business Income/Loss - Select New. For a couple filing MFJ, indicate if the Schedule C is for the taxpayer or spouse, or if the business is a qualified joint venture. (See here for more information about qualified joint ventures.)
Select the Principal Business Activity and Code - If you know the code, enter it in the space provided. If you don't know the code, you can click the PDF button to see a list, or you can click the Business Categories button to reveal a series of drop down menus with broad categories you can parse to find and select the code.
Schedule C Data Entry - The fields in this window only need completion if they are relevant, i.e., enter the business name and/or EIN if it has one, and enter an address if it's different than the tax return address. (Note that some states require an address for any business activity, so for those states you'll need to enter an address here for it to flow into the state return.) Select Ok when finished.
Schedule C - Name & Address Menu - This menu can be used to change any info if needed, otherwise select Exit.

Schedule C Questions Menu

The Schedule C Questions Menu needs to be reviewed for any fields that need to be changed from the default answer.

Accounting Method - Most business operate on either a cash or accrual method, but if the business uses another method permitted by the Internal Revenue Code, select Other and enter a required, short description.
Method Used to Value Closing Inventory - If the business has no inventory, skip this menu line. If it has inventory valued other than on cost basis, select this menu line and choose either Lower of Cost or Market or Other. If Other, you'll need to enter a required short description as well as longer explanation of the methodology.
Were There Any Changes in Determining Inventory - If the taxpayer filed Form 3115 changing their method of valuing inventory, select this menu line and answer Yes, followed by entering an explanation of the change.
Did You "Materially Participate"? - If the taxpayer did not materially participate in the business, select this menu line and answer No. The business activity will be treated as passive and passive activity rules will apply.
Is This the First Sch C Filed by This Business? - Change to Yes if needed.
Is All of Your Investment in This Business at Risk? - Change to No if any of the following apply. These are uncommon.

The taxpayer has nonrecourse loans used to acquire the business, finance the business, or to acquire property used in the business, that are not secured by their own nonbusiness property and for which they are not personally responsible to repay. (Exception: certain nonrecourse financing in connection with holding real property. See the Instructions for Form 6198 and Publication 925 for more information.)
The taxpayer has 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).
The taxpayer has borrowed 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 someone having such an interest.

Prior Year Unallowed Loss - An amount entered here implies the taxpayer does not materially participate in the business, and the material participation question must be answered No. The amount to enter is the amount showing as unallowed for this business on the prior year's Form 8582.
Prorate Expenses for Minister/Clergy? - If this Schedule C is for the self-employment income of a member of the clergy, answer Yes to complete the worksheets in Publication 517 to figure the percentage of tax-free income and the allowable deductions for the Schedule C. Click here for info on how to complete Schedule C and the worksheets for a member of the clergy.
Clergy Tax-Free Income Worksheet - Select this to open or reopen the worksheets (in Publication 517) to figure the percentage of tax-free income and the allowable deductions for the Schedule C. Click here for info on how to complete Schedule C and the worksheets for a member of the clergy.
Made Payments that would Require Filing Form(s) 1099? - If the taxpayer made any payments that require filing any Form 1099, answer Yes. (This question isn't applicable to a taxpayer filing Form 1040-SS.)
Did You or Will You File All Required Forms 1099? - If the preceding question is answered Yes, answer this question Yes or No as appropriate.

Select Exit to arrive at the Schedule C Edit Menu. From here you can select to enter the income or expenses, complete Form 8829 for business use of the home, and enter the information needed for Form 8995 to compute the Qualified Business Income Deduction (QBID).

Income

Gross Receipts or Sales (including Form 1099-K income) - Enter on this line gross receipts not reported on Forms 1099-MISC or 1099-NEC. If there is more than one source, e.g., 1099-K, cash register, website, consider using the F10 key to prepare an itemized list that's helpful for audit purposes.
Form 1099-MISC/1099-NEC - Gross Receipts - Enter on this line gross receipts reported on Forms 1099-MISC and 1099-NEC. If the income is reported in Box 3 of 1099-MISC, be sure to select the "Link" check box to link it to this Schedule C.
Income Reported on a Statutory Employee W-2 - Only enter on this line the amount(s) reported in Box 1 of Form W-2 for a statutory employee. Click here for more info about preparing Schedule C for a statutory employee.
Returns & Allowances - Enter here the total of returns (a cash or credit refund given to customers who returned defective, damaged, or unwanted products) and allowances (a reduction in the selling price of products, instead of a cash or credit refund.)
Cost of Goods Sold - If the business has inventory, complete this menu (Schedule C Part III).
Form 1099-MISC/1099-NEC - Other Income - Enter on this line other income reported on Forms 1099-MISC and 1099-NEC. If the income is reported in Box 3 of 1099-MISC, be sure to select the "Link" check box to link it to this Schedule C.
Other Income - Enter on this line other income not reported anywhere else.

Expenses

Most of the expense menu lines are straightforward, but here are a few lines that warrant more explanation.

Car & Truck

Choose from among four menu options based on (a) if the taxpayer is using standard mileage or actual expenses to determine their deduction for car and truck expenses, and (b) if they are required to file Form 4562:

Car & Truck (Std Mileage Rate - Schedule C) - Select if the taxpayer is claiming standard mileage and is not required to file Form 4562 any other reason. The vehicle(s) entered will be itemized in Schedule C Part IV.
Car & Truck (Actual Expenses - Schedule C) - Select if the taxpayer is claiming actual expenses but you're not using the TaxSlayer Pro depreciation module to calculate depreciation. You'll enter the mileages and actual expenses here, and you'll enter the depreciation amount(s) in the Form 4562 menu under the Depreciation menu.
Car & Truck (Std Mileage Rate - Form 4562) - Select if the taxpayer is using standard mileage and is required to file Form 4562. You'll enter mileages and other info for the Listed Property section of Form 4562.
Car & Truck (Actual Expenses) - This menu is a shortcut to the depreciation module to enter information about the vehicle to calculate depreciation and also enter its actual expenses.
Amount to Adjust Actual Expenses - For a business using standard mileage, enter the total of parking fees and tolls here.

When entering actual expenses, it's a good idea to use the F10 key when available to itemize them.

Caveats:

If the business uses five or more vehicles at the same time, the taxpayer must use actual expenses.
If the taxpayer chooses to use actual expenses for the first year of a vehicle's life, they cannot later change to standard mileage.
If the taxpayer chooses to use standard mileage for the first year of a vehicle's life, they can later switch to actual expenses. They will need to use straight line depreciation for the remaining estimated useful life of the vehicle.
Parking fees and tolls can be deducted when using standard mileage.
Use of standard mileage precludes both bonus depreciation and the section 179 expense deduction.
A "qualified nonpersonal use vehicle" must use actual expenses. See IRS Publication 946 here for a description and examples.
If the business is leasing a vehicle and chooses standard mileage in the first year, it cannot later switch to actual expenses.

Depreciation

Depreciation Module - Enter assets to be depreciated here, including vehicles if the taxpayer is using actual expenses rather than standard mileage. Also enter here any assets being amortized, such as goodwill or startup costs. If you are depreciating a building, you'll enter the cost of the building and the land separately.
Form 4562 - If you are calculating depreciation, amortization, and the section 179 deduction outside of TaxSlayer Pro, enter the required information here.
Enter the Depreciation Amount - If you're calculating depreciation outside of TaxSlayer Pro and are not electronically filing the return, you can enter the total depreciation here. The entry will only appear as an expense on Schedule C, without reference to Form 4562, so the return cannot be electronically filed.

Insurance

Insurance (Other than Health & Long-Term Care) - Enter here the amount of the premiums for business insurance.
Health Insurance to be carried to Adjustments - Enter here the amount paid for health insurance coverage for the taxpayer, spouse, and dependents. This amount will flow to Form 7206 to calculate the self-employed health insurance deduction.
Long-Term Care Insurance to be carried to Adjustments - Enter here the total paid for a qualified long-term care insurance for the taxpayer, spouse, and dependents. Note that the deductible amount for each individual is limited to the smaller of the actual premiums paid or the age limit for the individual. This amount will flow to Form 7206 to calculate the self-employed health insurance deduction.

Deductible Meals

The taxpayer can either deduct the actual cost of meals or use a standard meal allowance. If using the actual cost, enter the cost of meals while traveling away from home for business. This includes meals for business-related contacts, such as clients, consultants, and potential customers. It does not include the cost of entertainment. (See IRS Notice 2018-76 here if there any questions as to an expense's deductibility.) If using standard meal allowance, see IRS Publication 463 here to determine the amount that can be deducted.

50% Meals - Enter the the total cost here if the taxpayer is not subject to DOT hours of service limits.
80% Meals - If the taxpayer is subject to DOT hours of service limits, enter the total cost here. This includes interstate truck operators under DOT regulations, merchant mariners under Coast Guard regulations, and air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under FAA regulations.

Other Expenses

Enter under Other Expenses an expense that isn't deducted anywhere else. Use the F10 key to itemize any amounts entered here. See IRS Publication 334 here if you have a question about a certain expense's deductibility.

Examples of amounts to enter here:

Amounts paid for tangible property being deducted rather than capitalized under the section 1.263(a)-1(f) de minimis safe harbor election. If the taxpayer is making this election, you will need to create an election statement to be sent to the IRS with the return. See here for how to create this statement.
Up to $15,000 of costs paid or incurred to remove architectural or transportation barriers to individuals with disabilities and the elderly. See the instructions for Form 8826, Disabled Access Credit here for more information, but note the taxpayer can't take the credit and deduct the expenses at the same time.
Bad debts, i.e., debts and partial debts from sales or services that were included in income and are definitely known to be worthless.
Costs of certain qualified film and television productions or qualified live theatrical productions.
Up to $10,000 ($5,000 if married filing separately) of qualifying reforestation costs paid or incurred during the year, rather than capitalizing these costs, with the remainder, if any, amortized over an 84-month period.

Certain amounts will flow to Other Expenses from entries made elsewhere in the return: