There are similarities and differences between the IRS Form 1040 Schedules C and E. Depending on the circumstances, the owners of unincorporated businesses and disregarded entities (single-member LLCs) will report their income and losses on either Schedule C or E of their personal 1040.

Topics for discussion:

Schedule C: Profit or Loss from Business (Sole Proprietorships)

• Part I   – Schedule C – Income


• Part II – Schedule C – Expenses


• Part III – Schedule C – Cost of Goods


• Part IV – Schedule C – Information on Your Vehicle


• Part V – Other Expenses

Schedule E: Supplemental Income & Loss (From rental real estate, royalties. S corporations, estates, trusts, REMICs, etc.)

•  Part I   – Schedule E – Income or Loss from Rental Real Estate and Royalties


•  Part II – Schedule E – Income or Loss from Partnerships and S Corporations                                 


•  Part III – Schedule E – Income or Loss from Estates and Trusts 


•  Part IV – Schedule E – Income or Loss from Real Estate Mortgage Investment Conduits (REMICs)


•  Part V – Summary

Learning Objectives:

• Recognize where to report an individual taxpayer's income and expenses


• Distinguish which schedules the taxpayer is required to use and why


• Recall the specific reporting requirements of income and expenses in addition to the limitations of losses when filing personal income tax returns