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Page | 157 Schedule E of the income tax forms) are considered unearned income and annualized. Corporation losses are not budgeted in any way.

8701.1 Averaging Self-Employment Income A. Self-Employment as Primary Annual Support

When a household receives its annual support from self-employment income, such income is to be averaged over 12 months to determine the household's average monthly income from this source. This policy applies even if the income is received in only a short period of time or the household receives income from other sources in addition to the self-employment income. However, if the average annualized amount does not accurately reflect the household's actual circumstances because the household has experienced a substantial increase or decrease in business, a new calculation is completed on the self-employment income on anticipated earnings and not on the basis of prior income (e.g. income tax returns).

B. Self-Employment as Partial Support

Households may receive income from self-employment which is intended to support the household for only part of the year. Such self-employment income must be averaged over the period it is intended to cover.

8701.2 Self-Employment From a New Source Income from a self-employment enterprise that has been in business less than a year is to be averaged over the period of time the business has been in operation and the monthly amount projected for the coming year. Self-employment ledgers will need to be completed monthly until a reasonable average for income can be determined.

8701.3 Capital Gains Capital gains from last year are counted as income only if they are expected to recur in the current year. Proceeds from the sale of capital goods for equipment will be calculated in the same manner as a capital gain for Federal income tax purposes. To compute capital gain income, compare the sales price to the "cost or other basis." (The "cost or other basis" in general is the cost of the property, purchase commissions, improvements and sales expenses such as broker's fees and commissions minus depreciation, amortization and depletion.) These figures are listed on the income tax form 4797 under Part II. If the sales price is greater there is a gain and if the costs are greater there is a loss. The total amount of the capital gain is counted as income. When entering the income on the BUSI panel, make sure the correct type of self-employment (F- Farm, O – Other) is listed.

Note: Self-employment for SNAP purposes is not computed the same as it is for Internal Revenue Service (IRS) purposes. The income tax return forms may only be used for verification purposes. Example: A vendor who works only in the summer and supplements his income from other sources during the rest of the year would have his self-employment income averaged over the summer months rather than over a 12-month period because the income is only intended to meet the person’s needs for the summer months only. Example: An individual does gardening only in the summer months and works as a janitor for the remaining 9 months. His wife has year round employment. Since the self-employment is seasonal and only intended for the household’s needs in the summer, the self-employment income is budgeted over the 3 or 4 months the individual is self-employed.