9074.1 Calculate a Household's Self-employment Income as Follows

(1) Averaging self-employment income. (i) Average the income over the period the income is intended to cover, even if the household receives income from other sources. If the averaged amount does not accurately reflect the household's current circumstances, calculate the self-employment income on the basis of anticipated earnings, not prior earnings (ii) For self-employment that has been in existence for less than a year, average the income over the period of time the business has been in operation. Project that monthly amount for the coming year. (2) Determining monthly income from self-employment (i) For the period of time over which the self-employment income is determined, add all gross self-employment income (actual or anticipated) and capital gains, exclude the costs of producing the self-employment income, and divide the remaining amount of self-employment income by the number of months over which the income will be averaged. This amount is the monthly net self-employment income. Add the monthly self-employment income to any other earned income received by the household to determine the total monthly earned income. (ii) If the cost of producing self-employment income exceeds the income derived from self-employment as a farmer, such losses must be prorated according to (a)(1) of this section, and then offset against countable income to the household as follows: (A) Offset farm self-employment losses first against other self-employment income. (B) Offset any remaining farm self-employment losses against the total amount of earned and unearned income after the earned income deduction has been applied. (3) Capital Gains Calculate the proceeds from the sale of capital goods or equipment in the same manner as a capital gain for Federal income tax purposes. If the self-employment income is calculated on an anticipated basis, count the amount of capital gains the household anticipates receiving during the months over which the income is being averaged.