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SNAP CERTIFICATION MANUAL – SECTION 5000 5600 Self-Employment Income 5640 Capital Gains
EXAMPLE: A farmer has incorporated his farm. All of the corporation’s assets are related to the farm. The farmer is the corporation’s sole employee. He works at least 40 hours each week on the farm. The corporation’s stock is excluded as a resource. Verification of income from a corporation may be obtained from the corporation’s books or tax records. If the value of stock in a corporation is not readily available, the value may be determined by subtracting corporate liabilities from assets and prorating the difference among the shareholders based on the percentage of shares held.
5640 Capital Gains SNAP Manual 01/01/00 The term “capital gains” as used by the IRS describes the handling of profits from the sale or transfer of capital assets used in a self-employment operation. For IRS purposes, such proceeds less depreciation are considered taxable income. In the Supplemental Nutrition Assistance Program, depreciation is not allowed; so, for the purpose of determining SNAP eligibility, a capital gain is the sale price less encumbrances, interest, penalties, etc. Net capital gains are counted as part of the household’s self-employment income before the costs of producing the income are excluded. EXAMPLE: A farmer purchased a used combine for $6,000 in 1987. He depreciated the combine over a period of ten years for a total depreciation amount of $6,000. In 1998, he sold the combine for $2,000. He owed nothing on the combine. for Federal tax purposes, he had no capital gain on the combine. For SNAP purposes, he had a capital gain of $2,000.
5650 Special Payments to Farmers SNAP Manual 01/01/00 A farmer may receive any of the following payments or credits if he or she applies for the payment and is eligible to receive the credit or payment: Federal Gasoline Tax Credit This is a credit against tax liability. It is excluded as income. State Gasoline Tax Refund This is a non-recurring lump sum payment. It is excluded as income.