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A business is not operating when it cannot function in its specific purpose. For instance, if a mechanic cannot work for four months because of an illness or injury, and there is no one else to carry out the duties of the business, they may claim their business was not in operation for those months. 16.4.3.1.4 Real Property Real property means land and most things attached to the land, such as buildings and vegetation. 16.4.3.1.5 Non-real Property Non-real property means all property other than real property. Non-real property is personal or business property that typically is movable rather than attached to land. 16.4.3.2 Identifying Farms and Other Businesses A farm or other business should be identified according to the following criteria: 16.4.3.2.1 By Organization A farm or other business is organized in one of the following ways: • A sole proprietorship, which is an unincorporated business owned by one person. • A partnership, which exists when two or more persons associate to conduct business. Each person contributes money, property, labor, or skills and expects to share in the profits and losses. Partnerships are unincorporated. • A corporation is a legal entity authorized by a state to operate under the rules of the entity's charter. There may be one or more owners. A corporation differs from the other forms because a corporation:

Is taxed as a separate entity rather than the owners being taxed as individuals, and

Provides only limited liability. Each owner’s loss is limited to their investment in the corporation while the owners of unincorporated business are also personally liable. • An LLC, a business structure that combines the pass-through taxation of a partnership or sole proprietorship (the members are taxed directly) with the limited liability of a corporation. 16.4.3.2.2 By IRS Tax Forms A self-employed person who earns more than $400 net income must file an end-of-year return. A person who will owe more than $400 in taxes at the end of the year must file quarterly estimates. IRS tax forms for reporting self-employment income are listed below. • Form 1065—Partnership ◦ Schedule K-1 (Form 1065)—Partner's Share of Income, Deductions, Credits, etc. • Form 1120S—S Corporation ◦ Schedule K-1 (Form 1120S)—Shareholder's Share of Income, Deduction, Credits, etc. • Form 1040—Sole Proprietorship ◦ Form 4797—Sales of Business Property ◦ Schedule C (Form 1040)—Business (non-farm) ◦ Schedule E (Form 1040)—Rental and Royalty ◦ Schedule F (Form 1040)—Farm Income • Other Forms ◦ Schedule D (Form 1040)—Capital Gains and Losses