Service Centers and Submission Processing Centers are being informed of this change in addressing and processing Schedule Cs without related Schedule SEs.
As part of the annual liaison process between the IRS and the CalCPA Committee on Taxation, a question was submitted to the IRS pointing out self-employment tax problems that could arise because the 2007 instructions required each spouse electing qualified joint venture treatment for a rental real estate business to file a separate Schedule C (instead of Schedule E) even though that business' net income is not subject to the self-employment tax.
It is expected that the number of Schedule Cs being filed may increase in part due to the addition of IRC section 761(f) by the Small Business and Work Opportunity Act of 2007.
Tax professionals who prepare Schedule Cs should be aware of the options and prepared to address the changes that may occur.
She enters canceled checks for Schedule Cs or Es on QuickBooks and puts them in an envelope to send back to the client.
We request copies of clients' checks or bank statements showing the cleared check; detailed explanations on the returns for unusual items (using the tax software comments box); verification of IRA and pension rollovers; a comparison of previous and current 1099s (and an explanation from the client if there is no new one for the year); reconciliation of the gross income on a schedule C with the 1099s; verification the gross security sales figure entered on the tax return is equal to the amounts on brokerage firm 1099s; and answers to every question on the return.
However, there has been an unusual increase in the number of Schedule Cs
There are stacks of 1040 forms and Schedule Cs
and Schedule Ds.
Interestingly, the petitioner filed two separate Schedule Cs for the years in issue, one for the equestrian business and one for the interior design business.
When the IRS audited Topping, it segregated the equestrian from the interior design activities and disallowed all of the petitioner's Schedule C horse-related expenses.
At least one software package allows tax accountants to select a "joint" Schedule C to produce two Self-Employment tax schedules.
2002-69 states that a joint Schedule C may be filed for those in community property states.