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a. IRS Form 4797—Capital & Ordinary Gains b. IRS Schedule C (Form 1040)—Profit or Loss From Business c. IRS Schedule E (Form 1040)—Rental and Royalty Income d. IRS Schedule F (Form 1040)—Farm Income 2. Partnership (F-16036) a. IRS Form 1065—Partnership Income b. IRS Schedule K-1 (Form 1065)—Partner's Share of Income 3. Subchapter S Corporation (F-16035) a. IRS Form 1120S—Small Business Corporation Income b. IRS Schedule K-1 (Form 1120S—Shareholder's Share of Income) CWW will calculate the monthly countable income for each self-employment business, which will be added to the fiscal test group's other earned and unearned income. If monthly income is a loss, the loss will be subtracted from the non-self-employment income. When a household has more than one self-employment operation, the losses of one may be used to offset the profits of another. Losses from self-employment can be used to offset other income types. In situations where an individual is planning to file a joint tax return with their spouse, losses from self- employment may offset the spouse’s income. Each self-employment operation (Sole Proprietor, Partnership, S Corporation) requires its own Self- Employment page in CWW. Remember that while a salary or wage paid to a test group member is an allowable business expense, you must count it as earned income to the payee. Similarly, dividends or other types of passive income (as defined by the IRS) must be counted as unearned income. Even though IRS Schedule D (Form 1040) – Personal Capital Gains and Losses is associated with sole proprietorships, it is not considered self-employment income. If someone reports personal capital gains or losses, it is counted as unearned income (see SECTION 16.5 OTHER INCOME). 16.4.3.4.2 Depreciation, Depletion, and Disallowed Expenses Countable self-employment income will be the same as the net self-employment taxable income. Depreciation and depletion expenses are allowable expenses. The following expenses are disallowed expenses for BadgerCare Plus: • Charitable donations • Work-related personal expenses, such as transportation to and from work • Employer work-related personal expenses, such as pensions, employee benefit and retirement programs, or profit-sharing expenses (Business expenses for employees’ pensions, benefits, retirement programs, and profit-sharing expenses are allowable, but the work-related personal expenses of the employer are not.) Note The self-employed person's personal contributions to pensions and retirement programs can be counted for BadgerCare Plus as tax deductions, but they are not counted as business expenses when calculating the self- employment income. See SECTION 16.3.3 TAX DEDUCTIONS.