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Workers should only consult IRS tax forms only if all of the following conditions are met: • The business was in operation at least one full month during the previous tax year. • The business has been in operation six or more months at the time of the application. • The person does not claim a significant change in circumstances since the previous year. If all three conditions are not met, use anticipated earnings (see SECTION 15.6.5.3 ANTICIPATED EARNINGS). If you decide to use IRS tax forms, use them together with the charts in Process Help Section 11.2 Self- Employment Income, or the self-employment income worksheets, which identify which income and expenses need to be entered onto the Self-Employment page by line on the IRS tax forms. For each operation, select the worksheet you need (if applicable) and, using the provided tax forms and/or schedule, complete the worksheet (if applicable) and enter the income and expenses onto the Self-Employment page. 1. Sole Proprietor - Farm and Other Business There is no worksheet for Sole Proprietor. See Process Help Section 11.2.2.3.2 Entering Information for a Sole Proprietorship to identify which lines need to be entered in CWW for each of the following IRS tax forms: 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 When a household has more than one self-employment operation, the losses of one may be used to offset the profits of another. Apply this offset only to those self-employment operations that produced earned income. Do not apply a loss from unearned income to a gain in earned income. Losses from self- employment cannot be used to offset other earned or unearned income. 15.6.5.2 Depreciation Depreciation is an allowable deduction for EBD Medicaid cases. 15.6.5.3 Anticipated Earnings If past circumstances do not represent present circumstances, workers should calculate self- employment income based on anticipated earnings. Anticipated earnings should also 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: