Report a small business that you operate in Part 2.

Note that other entries in this guide specifically address farms, law firms, and corporate stock.  See those entries for more targeted guidance if applicable.

For You

Part 2

Report your small business if its value was more than $1,000 at the end of the reporting period or if you received more than $200 in income during the reporting period.

Description:  Provide the name of your business and the type of business being conducted.  In the absence of a specific business name, describe the trade practiced.  If the legal name of the business differs from the name under which the business operates, it is helpful if you provide both names for clarity.  In addition, unless otherwise specified, reported business interests are generally assumed to be structured as C-corporations.  Consequently, if your business is otherwise structured, it is helpful to describe the type of business interest, such as “LLC” or “sole proprietorship.”

EIF:  Select “N/A.”

Value:  Select the appropriate category to report the value of the business.

Income Type:  Specify the type(s) of income if the total amount of income during the reporting period exceeded $200.

Income Amount:  The level of detail required for income depends on the amount and type(s) of income.

(1) Income less than $201:  Select the category for “None (or less than $201).”

(2) Dividends, capital gains, interest, rent, or royalties:  Select the category that corresponds to the total amount of income received during the reporting period.

(3) Other income:  Provide the exact amount of income received during the reporting period.

Note that some businesses may produce (1) income categorized as dividends, capital gains, interest, rent, or royalties and (2) other income that does not fall into one of these categories.  In such cases, you may select a category for the dividends, capital gains, interest, rent, and royalties and then provide the exact amount of the other income as a separate line entry.  Alternatively, you may provide an exact amount of the total income received from the business as a single line entry.

Additional Requirements

Business Assets and Liabilities:  You need not itemize the assets of the business in Part 2.  Disclosing the small business itself is normally sufficient.  As an exception to this rule, you would report any assets that are unrelated to the operations of that business.  Report any liabilities for which you are personally liable in Part 8.

Compensation and Other Benefits:  In addition to business income, you may receive other compensation and benefits.  Report these as separate line entries using the instructions in this guide for that type of asset or income.  For example, various entries in this guide address severance payments, bonuses, deferred compensation, defined benefit plans, defined contribution plans, and other items.

Honoraria:  In general, you need to report the source of an honorarium (income for an appearance, speech, or article) separately even if you received the income through a single-member LLC or a speakers’ bureau.  See the honorarium entry in this guide for additional information.

Copyright on a Book:  In general, you need to report the copyright on a book even if you received the income through a single-member LLC.  Report your LLC on one line in Part 2 and then report each book on a separate line.

Interests Arising from the Sale of a Business:  Report a third-party escrow agreement using the instructions in this guide for such agreements.