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• Principal payments on loans for the purchase price of income-producing real estate, capital assets and equipment, and durable goods. (An example is the principal portion of mortgage payments. Only the interest portion of business loan payments is an allowable expense.) Note Disallowed expenses are added back into an individual’s gross income on the BadgerCare Plus Budget page. 16.4.3.4.3 Anticipated Earnings If past circumstances do not represent present circumstances, workers should calculate self- employment income based on anticipated earnings. Anticipated earnings should be used in the following situations: • The applicant’s or member’s business underwent a significant change in circumstances. A significant change in circumstances is any change that can be expected to affect income over time. It is the applicant’s or member’s responsibility to report significant changes. The following are examples of significant changes: ◦ The owner sold or closed down the business. ◦ The owner sold a part of his business (for example, one of two retail stores). ◦ The owner is ill or injured and will be unable to operate the business for a period of time (nor will anyone else be able to operate the business for a period of time). ◦ A plumber gets the contract on a new apartment complex. The job will take nine months, and their income will increase. ◦ A farmer suffers unusual crop loss due to the weather or other circumstances. ◦ There is a substantial cost increase for a particular material such that there will be less profit per unit sold. ◦ Sales are consistently below previous levels for an unknown reason. The relevant period may vary depending on the type of business (consider normal sales fluctuations). • The applicant’s or member’s business was not in operation for at least one full month during the previous tax year. • The applicant’s or member’s business was not in operation for six or more months when the person applied for or renewed benefits or reported changes. IM workers should determine whether it is necessary to use anticipated earnings on a case-by-case basis and document the reasons for the determination in case comments. The date of an income change is the date a worker and applicant (or member) agree that a significant change in circumstances occurred. IM workers must also judge whether the person's report was timely to decide if the case was overpaid or underpaid. Changes are then effective according to the normal prospective budgeting cycle. IM workers should not recover payments made before the agreed on date. 16.4.3.4.3.1 Reporting Anticipated Earnings The Self-Employment Income Report form (F-00107) (also called a SEIRF) and the Self-Employment Income Report: Farm Business form (F-00219) simplify reporting income and expenses when earnings must be anticipated. Self-Employment Income Report forms can be used to report income for any type of business with any form of organization. However, some people, especially farm operators, may find it easier to complete the applicable IRS Form 1040 schedule when income and expense items are more complex. For anticipated earnings to be determined, the applicant or member must complete a Self-Employment Income Report form for the months of operation since the significant change in circumstances occurred, not to exceed 12 months. (Note: The beginning of a business is a significant change in circumstances.)