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determine the average monthly gross earnings from self- employment.

If not using a federal tax return or prior year’s quarterly tax statements, use a/b’s business records, bookkeeping records, or other verification to determine the average monthly gross income for the prior 12 months or number of months the individual has been self-employed.

(2) Subtract the allowable operational expenses paid in the months of the base period from gross income received in same months of the base period. Divide this amount by 12 or the total number of months the individual(s) was self-employed to determine the countable adjustable gross monthly income.

b. If the a/b states there has been a change in income and the method in a. above would not be accurate, apply the Gross-Net Ratio.

(1) Determine the ratio between the net profit and gross receipts for last year from a/b’s federal tax return or business records (i.e., net profit of $1,200 for $6,000 gross receipts or 20%).

(2) Determine the actual gross receipts for the current taxable year thus far from the a/b’s records and project it for the remainder of the year (i.e., $4,000 in current year's receipts for the first 6 months gives an assumed gross of $8,000 for the entire year).

(3) Apply the gross-net ratio (i.e., 20% of $8,000 is $1,600) to the gross receipts projected for the year to obtain an estimate of net profit.

(4) Prorate the net profit equally into the 12 months of the taxable year.

10. Projecting Partial Years Profit for Whole Year

When the B.U. is engaged in a new business, have the individual supply a profit and loss statement or other business records for the taxable year to date so a net profit can be derived. Project for the year and prorate to a monthly amount.

11. If the business is to be continued but no profit is realized due to circumstances beyond the control of the a/b. Do not consider the property value in resources.

a. Flag the case for review of income when the income begins again.