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Incorporated businesses are not self-employment enterprises. Property owned by corporations and corporate stock cannot be excluded as necessary for self-employment or self-support because the individual does not own it. Even when the business started as self-employment, once it is incorporated, it is no longer considered self-employment. Income the individual receives while working for the corporation is considered countable wages. NOTE: Earnings paid to corporate offices are considered wages, however, fees paid to corporate directors are considered self-employment income. ACA: Count corporate income whether or not the client receives it. ABD and Family Medically Needy: Count any corporate income reported on Schedule E, Line 32 as unearned income only when received. ACA: Any loss reported on Schedule E, Line 32 can be used to offset other income and decrease MAGI income. ABD and Family Medically Needy: Losses reported on Schedule E, Line 32 are not used in any budget calculation. LIMITED LIABILITY COMPANIES (LLC) & PARTNERSHIPS: Medicaid treats LLCs and limited partnerships like corporations, partnerships are not considered self- employment. LLC’s can file taxes as either a corporation (Schedule E or 1120S) or self- proprietor (schedule F or C). Since LLC’s can choose how they want to file their taxes we will input into CHIMES as either corporate income or self-employment depending on how they file. If filing as a corporation, guaranteed salaries are treated as regular wages; all other income received from an LLC or partnership is considered unearned income. Property owned by an LLC or partnership cannot be excluded as necessary for self-employment or self- support because these arrangements are not considered self-employment, and the LLC/partnership owns the property, not the individual. Partnerships are entities with two or more partners and may include both “working” and “silent” partners. Partnerships are required to file 1065 and K-1 forms in addition to personal tax forms. All partners are responsible for business income and liabilities, with the partnership defining each partner’s share. Determine partnership income in the same manner as LLC and corporate income; income reported on a 1065 or K-1 is considered unearned, or passive income. Partnerships do not report or pay income taxes. Only wages paid to a working partner is considered earned income, however, there won’t be a W-2 or 1099 form issued so the eligibility staff member must work with the client to determine how much, if any, of the income reported on the 1065 or K-1 is earned. ACTIVITIES THAT ARE NOT SELF-EMPLOYMENT: The following are treated as unearned (i.e., passive) income, and are not considered self-employment: 1. Self-employment or partnership rental income where the individual does not participate in the business at least 10 hours per week or does not report it as self-employment on Schedule C or F (passive rental income is usually reported on Schedule E). See CMA 501-1 Unearned Income. 2. Contract for deed income (CMA 501-1 Unearned Income), 3. Certain boarder income (see Boarders heading in this section), or