Form Pa-40 C-Ez - Pa Schedule C-Ez - Short Form Profit From Business Or Profession Page 2
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20802110056
0902110022
PA SCHEDULE C-EZ
(FI)
Part B.
Line 1. Include all cash receipts from operating your business or profession. Include in Line 1 the value of property
and the value of services that you received for providing your products, goods and services.
Line 2. Enter the total of the business expenses that you actually paid in operating your business or profession.
This amount may not exceed $5,000. PA law follows accepted accounting principles and practices in determining
net profits. You may fully deduct all the ordinary, necessary, and reasonable business expenses that are directly
related to operating your business or profession. For additional information, go to the Department’s Web site and
link to the PA PIT Guide.
Line 3. Subtract Line 2 from Line 1. Include the result on Line 4 of your PA-40.
Line 4. Fill in this oval if you filed a Federal Schedule C-EZ with your federal tax return and are using the same
amounts. Important: You cannot use federal bonus depreciation. You cannot use the 2003 or 2008 federal
rules governing IRC section 179 expensing.
What is a Business or Profession?
ALL
You operate a business or profession if you meet
of the following:
1. You market your products, goods and services to your customers in a marketplace;
2. You regularly and continuously conduct your commercial activities;
3. You do not limit or restrict your commercial activities to certain related or unrelated customers;
4. You calculate your net income or loss solely from those items of revenue, cost, expense or liability that you
receive from or incur in:
(a) The ordinary course and operation of your business or profession;
(b) Securities employed as working capital in the ordinary operation of your business or profession;
(c) Accounts and notes receivable from the sales of products and services in the ordinary operation of your
business or profession; or
(d) Assets that serve an operational function in the ordinary operation of your business or profession.
Your allowable business expenses are the direct, ordinary, necessary and reasonable expenses you paid or
incurred during the taxable year. You may deduct the expenses you incur when those expenses are directly related
to your business activity and necessary for and actually paid in the production and marketing of your products,
goods or services. Your personal expenses are not deductible.
do not
The following activities
constitute the operation of a business or profession. If you have these kinds of
sales, you may not use PA Schedule C-EZ. You usually report transactions described in Lines 1 through 4 on a
PA Schedule D. The income from the transaction described in Line 5 is usually royalty income on PA Schedule E.
1. A sale, discontinuation or abandonment of a business or segment thereof.
2. An isolated or nonrecurring transaction that is not a normal or routine business activity.
3. The ownership or disposition of assets that you hold for long-term investment purposes.
4. Trading in securities for personal purposes.
5. A nonoperating interest in coal, oil, gas or minerals-in-place, unless they serve an operational function in
the operation of the owner’s business.
IMPORTANT:
The payment of any tax imposed on or measured by gross or net earned or unearned income is
not an allowable expense under PA law.
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0902110022
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