Business Farm Supplement

jjcddg
Fri, 14 Mar 2008 14:14:53 +0000

If your parents business is incorporated, and is an S-Corp, you should be able to find all of the numbers on their 1120S. In an S-corp, your parents business would pay them and give them a W-2. Once you subtract out wages and expenses you will come up with the net profit and loss (line 15) and since your parents own the business 100%,that number would also go on line 16 (in my case it was a minimal amount)

If they are a sole proprietorship (not incorporated) you should be able to find all of the info on schedule C. In this case, your parents do not get W-2 wages, so the net profit and loss (line 15) is the business income that they report on their 1040. Essentially, that is what they earn but it is not reflected as “wages”.

If their business is an an LLC, I don’t have a clue.

Don’t forget to itemize the “other expenses” if any expense is over $1000. For a sole proprietor ship this could include office supplies, advertising, auto expenses, legal and professional, liability insurance, phone etc. For the
S-Corp this includes all of the above plus social security tax, medicaid, unemployment tax etc.