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VIRGINIA DEPARTMENT OF SOCIAL SERVICES SPECIAL INCOME DETERMINATIONS

10/24 VOLUME V, PART XII, PAGE 4

income must be processed using normal annualizing procedures for self-employment income. Since the payment is counted as income, it is excluded as a resource

4. Capital Gains (7 CFR 273.11(a)(3))

The proceeds from the sale of capital goods or equipment are calculated in the same manner as a capital gain for federal income tax purposes. Even if only 50% of the proceeds from the sale of capital goods is taxed, the BPS must count the full amount of the capital gain as income for SNAP purposes.

Example

Farmer A purchased a tractor for $3,000. Over a period of 10 years, he claimed $3,000 in depreciation on the tractor. After 10 years, he sold the tractor for $1,000. For income tax purposes, the transaction appears as follows:

Purchase price

$3,000 Depreciation claim 3,000 Purchase base

0

Sale price

$1,000 Reported as gross

x 50% Taxable income

$ 500

For SNAP purposes, the entire proceeds or $1,000 would be included as gross income.

5. Allowable Costs of Producing Self-Employment Income (7 CFR 271.11(a)(4))

Allowable costs of producing self-employment income include, but are not limited to, the following:

a. the identifiable costs of labor, stock, raw material, seed and fertilizer.

b. payments on the principal of the purchase price of income producing real estate and capital assets, equipment, machinery and other durable goods or on the principal for improvements to real estate.

c interest paid to purchase income producing property, capital assets, equipment, machinery, and other durable goods.

d. insurance premiums paid on income producing property.

e. taxes paid on income producing property.

f. costs of repairs to property needed for general maintenance.

g. identifiable shelter costs needed for the business enterprise.

TRANSMITTAL #35