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(a) Self-employment income. Income received from boarders by a household that does not own or operate a commercial boarding house shall be budgeted in accordance with subdivision (b) of this section. All other households receiving self-employment income, including those households that own and operate a commercial boarding house, shall have employment income calculated as follows:
(1) Annualizing self-employment income.
(i) Self-employment income which represents a household's annual income shall be annualized over a 12-month period even if the income is received within only a short period of time during that 12 months.
(ii) Self-employment income which is received on a monthly basis but which represents a household's annual support will normally be averaged over a 12-month period. If, however, the averaged amount does not accurately reflect the household's actual monthly circumstances because the household has experienced a substantial increase or decrease in business, self-employment income will be calculated based on anticipated earnings. Self- employment income must not be calculated on the basis of prior income ( e.g., income tax returns) when the household has experienced an increase or decrease in business as determined by the local department.
(iii) Self-employment income which is intended to meet the household's needs for only part of the year shall be averaged over the period of time the income is intended to cover.
(iv) When a household's self-employment enterprise has been in existence for less than a year, the income from that self-employment enterprise shall be averaged over the period of time the business has been in operation. The monthly amount shall then be projected for the coming year. However, if the business has been in operation for such a short time that there is insufficient information to make a reasonable projection, the household shall be certified for less than a year. Such certification process shall continue until the business has been in operation long enough to permit a longer projection.
(v) Notwithstanding the provisions of subparagraphs (i) through (iv) of this paragraph, households subject to monthly reporting/retrospective budgeting which derive self-employment income from a farming operation and which incur irregular expenses to produce such income must have the option to annualize the allowable costs of producing self-employment income from farming when the self-employment farm income is annualized.
(vi) When the cost of producing self-employment income exceeds the income derived from self-employment as a farmer, such losses must be offset against any other countable income in the household. To be considered a self-employed farmer, the farmer must receive or anticipate receiving annual gross proceeds of $1,000 or more from the farming enterprise.
(i) Self-employment income which represents a household's annual income shall be annualized over a 12-month period even if the income is received within only a short period of time during that 12 months.
(ii) Self-employment income which is received on a monthly basis but which represents a household's annual support will normally be averaged over a 12-month period. If, however, the averaged amount does not accurately reflect the household's actual monthly circumstances because the household has experienced a substantial increase or decrease in business, self-employment income will be calculated based on anticipated earnings. Self- employment income must not be calculated on the basis of prior income ( e.g., income tax returns) when the household has experienced an increase or decrease in business as determined by the local department.
(iii) Self-employment income which is intended to meet the household's needs for only part of the year shall be averaged over the period of time the income is intended to cover.
(iv) When a household's self-employment enterprise has been in existence for less than a year, the income from that self-employment enterprise shall be averaged over the period of time the business has been in operation. The monthly amount shall then be projected for the coming year. However, if the business has been in operation for such a short time that there is insufficient information to make a reasonable projection, the household shall be certified for less than a year. Such certification process shall continue until the business has been in operation long enough to permit a longer projection.
(v) Notwithstanding the provisions of subparagraphs (i) through (iv) of this paragraph, households subject to monthly reporting/retrospective budgeting which derive self-employment income from a farming operation and which incur irregular expenses to produce such income must have the option to annualize the allowable costs of producing self-employment income from farming when the self-employment farm income is annualized.
(vi) When the cost of producing self-employment income exceeds the income derived from self-employment as a farmer, such losses must be offset against any other countable income in the household. To be considered a self-employed farmer, the farmer must receive or anticipate receiving annual gross proceeds of $1,000 or more from the farming enterprise.
(2) Determining monthly income from self-employment. Monthly income from self-employment shall be determined as follows:
(i) For the period of time during which self-employment income is determined, add all gross self-employment income (including capital gains), exclude the cost of producing the self-employment income, and divide the self-employment income by the number of months over which the income will be averaged.
(ii)
(a) For those households whose self-employment income is not averaged as described above, but is instead calculated on an anticipated basis, add any capital gains the household anticipates it will receive in the next 12 months, starting with the date the application is filed, and divide this amount by 12.
(b) This amount shall be used in successive certification periods during the next 12 months, except that a new average monthly amount shall be calculated over this 12-month period if the anticipated amount of capital gains changes. Add the anticipated monthly amount of capital gains to the anticipated monthly self-employment income, and subtract the cost of producing the self-employment income. The cost of producing the self- employment income shall be calculated by anticipating the monthly allowable costs of producing the self-employment income.
(iii) The monthly net self-employment income will be added to any other earned income received by the household. The total monthly earned income, less the 20-percent earned income deduction as specified in section 387.12(b) of this Part, will then be added to all monthly unearned income received by the household. The standard deduction, dependent care, and shelter costs will be computed as for any other household and subtracted to determine the monthly net income of the household.
(i) For the period of time during which self-employment income is determined, add all gross self-employment income (including capital gains), exclude the cost of producing the self-employment income, and divide the self-employment income by the number of months over which the income will be averaged.
(ii)
(a) For those households whose self-employment income is not averaged as described above, but is instead calculated on an anticipated basis, add any capital gains the household anticipates it will receive in the next 12 months, starting with the date the application is filed, and divide this amount by 12.
(b) This amount shall be used in successive certification periods during the next 12 months, except that a new average monthly amount shall be calculated over this 12-month period if the anticipated amount of capital gains changes. Add the anticipated monthly amount of capital gains to the anticipated monthly self-employment income, and subtract the cost of producing the self-employment income. The cost of producing the self- employment income shall be calculated by anticipating the monthly allowable costs of producing the self-employment income.
(a) For those households whose self-employment income is not averaged as described above, but is instead calculated on an anticipated basis, add any capital gains the household anticipates it will receive in the next 12 months, starting with the date the application is filed, and divide this amount by 12.
(b) This amount shall be used in successive certification periods during the next 12 months, except that a new average monthly amount shall be calculated over this 12-month period if the anticipated amount of capital gains changes. Add the anticipated monthly amount of capital gains to the anticipated monthly self-employment income, and subtract the cost of producing the self-employment income. The cost of producing the self- employment income shall be calculated by anticipating the monthly allowable costs of producing the self-employment income.
(iii) The monthly net self-employment income will be added to any other earned income received by the household. The total monthly earned income, less the 20-percent earned income deduction as specified in section 387.12(b) of this Part, will then be added to all monthly unearned income received by the household. The standard deduction, dependent care, and shelter costs will be computed as for any other household and subtracted to determine the monthly net income of the household.
(3) Capital gains. The proceeds from the sale of capital goods or equipment shall be calculated in the same manner as a capital gain for Federal income tax purposes. Even though only 50 percent of the proceeds from the sale of capital goods or equipment is taxed for Federal income tax purposes, the local department shall count the full amount of the gain as income for food stamp purposes.
(4) Allowable costs of producing self-employment income.
(i) Allowable costs of producing self-employment income include, but are not limited to, the identifiable costs of labor, stock, raw material, seed, fertilizer, interest paid to purchase income-producing property, insurance premiums, and taxes paid on income-producing property.
(ii) In determining net self-employment income, the following items shall not be allowable as costs of doing business:
(a) payments on the principal of the purchase price of income-producing real estate, capital assets, equipment, machinery, and other durable goods;
(b) net losses from previous periods;
(c) Federal, State and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as transportation to and from work), as these expenses are reflected in the 20-percent earned income deduction specified in section 387.12(b) of this Part; and
(d) depreciation.
(i) Allowable costs of producing self-employment income include, but are not limited to, the identifiable costs of labor, stock, raw material, seed, fertilizer, interest paid to purchase income-producing property, insurance premiums, and taxes paid on income-producing property.
(ii) In determining net self-employment income, the following items shall not be allowable as costs of doing business:
(a) payments on the principal of the purchase price of income-producing real estate, capital assets, equipment, machinery, and other durable goods;
(b) net losses from previous periods;
(c) Federal, State and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as transportation to and from work), as these expenses are reflected in the 20-percent earned income deduction specified in section 387.12(b) of this Part; and
(d) depreciation.
(a) payments on the principal of the purchase price of income-producing real estate, capital assets, equipment, machinery, and other durable goods;
(b) net losses from previous periods;
(c) Federal, State and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as transportation to and from work), as these expenses are reflected in the 20-percent earned income deduction specified in section 387.12(b) of this Part; and
(d) depreciation.