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c. Verify operational expenses for the twelve months prior to the application or recertification interview or number of months the a/b or financially responsible person has been self-employed.

d. Convert operational expenses to a monthly amount.

e. Only deduct expenses which have been paid and are business related.

5. Allowable operational expenses include but are not limited to:

a. Fertilizer, insecticides, seed, crop insurance,

b. Livestock maintenance,

c. Interest portion of mortgage (principal not allowed),

d. Rent payments,

e. Taxes on farm property or equipment,

f. Building and equipment maintenance/insurance,

g. Interest payments on debts or loans directly related to producing the income such as interest on loans for seed and fertilizer,

h. Labor, or

i. Verified costs of transportation related only to the farm operation.

6. Verification sources for income and operational expenses: Refer to Self-Employment in VII. above. 7. Disagreements

If records disagree, attempt to resolve the difference. If unable to resolve, use records which verify the lower amount.

8. Computation

a. If the a/b states there have been no change in the business earnings in the past year, budget projected income from the base period.

b. If a federal tax return or prior year’s quarterly tax statements are not available, use a/b’s business records to verify base period gross income.