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Low Income Home Energy Assistance Program Division 10 Service 415 Program 415 Chapters 05 - 65 North Dakota Department of Health and Human Services

in as these are not an allowable expense. This income is generally included on Schedule E. 6. Royalty Income – a percentage of gross or net revenues derived from the use of an asset or a fixed price of a unit sold of an item. Income individuals receive from royalties is considered UNEARNED income as a result of self-employment. Royalty income is generally included on Schedule E. 7. Cooperative distributions from the sale of goods are countable income and must not be deducted from farm income. 8. S –Corporation – a separate business entity with 1 to 100 shareholder(s) that passes through the net profit or loss to their shareholder(s). The business profits are taxed at individual tax rates on each individual shareholder’s income tax. Income shareholders receive from a corporation is considered UNEARNED income as a result of self-employment. This income is generally included on the Schedule K-1 (1120S). The shareholder’s income is determined by adding the shareholder’s share of depreciation or depletion to their ordinary business income, net rental real estate income, interest income and dividend income. Depreciation and depletion are added back in as these are not an allowable expense. Depreciation and depletion are generally found on the Form 1120S.

NOTE: An owner or employee of a corporation is not a self- employed individual because the business income and liabilities belong to the corporation, not the individual. Wages that an owner or employee receive from a corporation are considered earned income. 9. Estate or Trust Income – Income received from an estate or trust. Income individuals receive from estate or trusts is considered UNEARNED income as a result of self-employment. Estate or trust income is generally included on Schedule E.