Business Tax Basics - Index PDF

BUSINESS BASICS
1. Getting Started
Forms of Organization
Licenses Required
Permits Required
Insurance
2. Operating
Start from Scratch
Part Time vs. Full Time
Buying
3. Financing
Types
Costs
Sources
4. Required Records
Bookkeeping Systems (Manual vs. Computer)
Types (Cash, Hybrid, Accrual)
Payroll
5. Leverage
Employees: Personnel Requirements, Tasks to perform, Job Description,
Personnel Policy
Subcontractors
Joint Ventures
6. Marketing
Who is your prospect? (Think Niche) Advertising
Where are they? (Lists) Publicity
Reaching Them Branding
Media: DM, FAX, Voice Broadcast, TV, Radio
Package vs. Products
7. Taxes
Entity
Personal
8. Attitudes/Abilities
9. Assets
Personal Vehicle
Home vs. Office
Control/Isolation
BUSINESS STARTUP CHECKLIST
Reserve the entitys name
Articles of Organization/Incorporation
Order Corporation Kit Stock Certificates, Specimen Minutes, Book and Seal
Organization Minutes
Federal Employers Identification Number
S-Election
State-Employers Corporation Filing, Sales Tax Registration, Employers Withholding
City Business License
State License(s) Contractors, Beverage, Tobacco, Tire
Federal License(s) Heavy Vehicle
Insurance Liability, Vehicle, Umbrella, Bond, Workers Compensation
Employment Commission (VEC)
Bank Account
Business Books
Business Forms Stationery & Envelopes, Business Cards, Invoices, Estimate Forms
SCHEDULE C Profit or Loss From Business OMB No. 1545-0074
(Form 1040)
Department of the Treasury

u
(Sole Proprietorship)
Partnerships, joint ventures, etc., must file Form 1065 or 1065-B.
2005
Attachment
Internal Revenue Service (99) u Attach to Form 1040 or 1041. u See Instructions for Schedule C (Form 1040). Sequence No. 09
Name of proprietor Social security number (SSN)
A Principal business or profession, including product or service (see page C-2 of the instructions) B Enter code from pages C-8, 9, & 10
u
C Business name. If no separate business name, leave blank. D Employer ID number (EIN), if any
E Business address (including suite or room no.) u

City, town or post office, state, and ZIP code
F Accounting method: (1) Cash (2) Accrual (3) Other (specify) u
G Did you materially participate in the operation of this business during 2005? If No, see page C-3 for limit on losses Yes No
H If you started or acquired this business during 2005, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u
Part I Income
1 Gross receipts or sales. Caution. If this income was reported to you on Form W-2 and the Statutory
employee box on that form was checked, see page C-3 and check here . . . . . . . . . . . . . . . . u 1
2 Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00
4 Cost of goods sold (from line 42 on page 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0.00
5 Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0.00

6 Other income, including Federal and state gasoline or fuel tax credit or refund (see page C-3) . . . . . . . 6
7 Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 7 0.00

Part II Expenses. Enter expenses for business use of your home only on line 30.
8 Advertising . . . . . . . . . . . . . . . . 8 18 Office expense . . . . . . . . . . . . 18
9 Car and truck expenses (see 19 Pension and profit-sharing plans 19
page C-3) . . . . . . . . . . . . . . . 9 20 Rent or lease (see page C-5):
10 Commissions and fees . . . . . 10 a Vehicles, machinery, and equipment . . 20a
11 Contract labor (see page C-4) 11 b Other business property . . . . . . 20b
12 Depletion . . . . . . . . . . . . . . . . . 12 21 Repairs and maintenance . . . . 21
22 Supplies (not included in Part III) . . 22
13 Depreciation and section 179
expense deduction (not 23 Taxes and licenses . . . . . . . . . 23
included in Part III) (see 24 Travel, meals, and entertainment:
page C-4) . . . . . . . . . . . . . . 13 a Travel . . . . . . . . . . . . . . . . . . . . . 24a
14 Employee benefit programs b Deductible meals and
(other than on line 19) . . . . . 14 entertainment (see page C-5) 24b
15 Insurance (other than health) . 15 25 Utilities . . . . . . . . . . . . . . . . . . . 25
16 Interest: 26 Wages (less employment credits) . . 26
a Mortgage (paid to banks, etc.) . . 16a 27 Other expenses (from line 48 on
b Other . . . . . . . . . . . . . . . . . . . . 16b page 2) . . . . . . . . . . . . . . . . . . . . . . 27
17 Legal and professional
services . . . . . . . . . . . . . . . . . . 17
28 Total expenses before expenses for business use of home. Add lines 8 through 27 in columns . . . u 28 0.00
29 Tentative profit (loss). Subtract line 28 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 0.00

30 Expenses for business use of your home. Attach Form 8829 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
31 Net profit or (loss). Subtract line 30 from line 29.
If a profit, enter on Form 1040, line 12, and also on Schedule SE, line 2 (statutory employees,
see page C-6). Estates and trusts, enter on Form 1041, line 3.
If a loss, you must go to line 32.
} 31 0.00
32 If you have a loss, check the box that describes your investment in this activity (see page C-6).
If you checked 32a, enter the loss on Form 1040, line 12, and also on Schedule SE, line 2
(statutory employees, see page C-6). Estates and trusts, enter on Form 1041, line 3.
If you checked 32b, you must attach Form 6198. Your loss may be limited.
} 32a
32b
All investment is at risk.
Some investment is not
at risk.
For Paperwork Reduction Act Notice, see page C-7 of the instructions. Schedule C (Form 1040) 2005
ISA
STF FED2615F.1
Schedule C (Form 1040) 2005 Page 2
Part III Cost of Goods Sold (see page C-6)
33 Method(s) used to
value closing inventory: a Cost b Lower of cost or market c Other (attach explanation)
34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If
Yes, attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . Yes No
35 Inventory at beginning of year. If different from last years closing inventory, attach explanation . . . . 35
36 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
37 Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
38 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
39 Other costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
40 Add lines 35 through 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 0.00
41 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on page 1, line 4 . . . . . 42 0.00
Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on
line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 on page
C-4 to find out if you must file Form 4562.
43 When did you place your vehicle in service for business purposes? (month, day, year) u .
44 Of the total number of miles you drove your vehicle during 2005, enter the number of miles you used your vehicle for:
a Business b Commuting (see instructions) c Other
45 Do you (or your spouse) have another vehicle available for personal use? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No
46 Was your vehicle available for personal use during off-duty hours? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No
47a Do you have evidence to support your deduction? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No
b If Yes, is the evidence written? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

Part V Other Expenses. List below business expenses not included on lines 826 or line 30.
48 Total other expenses. Enter here and on page 1, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Schedule C (Form 1040) 2005
STF FED2615F.2
4562 Depreciation and Amortization OMB No. 1545-0172
Form
(Rev. January 2006)
(Including Information on Listed Property) 2005
Attachment
Internal Revenue Service See separate instructions. Attach to your tax return. Sequence No. 67
Name(s) shown on return Business or activity to which this form relates Identifying number
Part I Election To Expense Certain Property Under Section 179

Note: If you have any listed property, complete Part V before you complete Part I.
1 Maximum amount. See instructions for a higher limit for certain businesses . . . . . . . . . . . . . . . . . . . . 1 $105,000
2 Total cost of section 179 property placed in service (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Threshold cost of section 179 property before reduction in limitation . . . . . . . . . . . . . . . . . . . . . . . . . 3 $420,000
4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . 4
5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing
separately, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Description of property (b) Cost (business use only) (c) Elected cost
7 Listed property. Enter the amount from line 29 . . . . . . . . . . . . . . . . . . . . . . . 7

8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 . . . . . . . . . . . . . 8 0.00
9 Tentative deduction. Enter the smaller of line 5 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 0.00
10 Carryover of disallowed deduction from line 13 of your 2004 Form 4562 . . . . . . . . . . . . . . . . . . . . . . 10
11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) . . . . . . . . . 11
12 Section 179 expense deduction. Add lines 9 and 10, but do not enter more than line 11 . . . . . . . . . . 12 0.00
13 Carryover of disallowed deduction to 2006. Add lines 9 and 10, less line 12 13 0.00
Note: Do not use Part II or Part III below for listed property. Instead, use Part V.
Part II Special Depreciation Allowance and Other Depreciation (Do not include listed property.) (See instructions.)
14 Special allowance for certain aircraft, certain property with a long production period, and qualified NYL
or GO Zone property (other than listed property) placed in service during the tax year (see instructions) 14
15 Property subject to section 168(f)(1) election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Other depreciation (including ACRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Part III MACRS Depreciation (Do not include listed property.) (See instructions.)
Section A
17 MACRS deductions for assets placed in service in tax years beginning before 2005 . . . . . . . . . . . . . 17
18 If you are electing to group any assets placed in service during the tax year into one or more
general asset accounts, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . j
Section B Assets Placed in Service During 2005 Tax Year Using the General Depreciation System
(b) Month and (c) Basis for depreciation
(d) Recovery
(a) Classification of property year placed in (business/investment use (e) Convention (f) Method (g) Depreciation deduction
period
service only see instructions)
19a 3-year property
b 5-year property
c 7-year property
d 10-year property
e 15-year property
f 20-year property
g 25-year property 25 yrs. S/L
h Residential rental 27.5 yrs.
MM S/L
property 27.5 yrs.
MM S/L
i Nonresidential rental 39 yrs.MM S/L
property MM S/L
Section C Assets Placed in Service During 2005 Tax Year Using the Alternative Depreciation System
20a Class life S/L
b 12-year 12 yrs. S/L
c 40-year 40 yrs. MM S/L
Part IV Summary (See instructions.)
21 Listed property. Enter amount from line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21.
Enter here and on the appropriate lines of your return. Partnerships and S corporations see instr. . 22 0.00
23 For assets shown above and placed in service during the current year,
enter the portion of the basis attributable to section 263A costs . . . . . 23
For Paperwork Reduction Act Notice, see separate instructions. Form 4562 (2005) (Rev. 1-2006)
ISA
STF FED5085F.1
Form 4562 (2005) (Rev. 1-2006) Page 2
Part V Listed Property (Include automobiles, certain other vehicles, cellular telephones, certain computers, and property used for
entertainment, recreation, or amusement.)
Note: For any vehicle for which you are using the standard mileage rate or deducting lease expense, complete only 24a, 24b,
columns (a) through (c) of Section A, all of Section B, and Section C if applicable.
Section A Depreciation and Other Information (Caution: See the instructions for limits for passenger automobiles.)
24a Do you have evidence to support the business/investment use claimed? j Yes j No 24b If Yes, is the evidence written? j Yes j No
(c)
(e) (i)
(a) (b) Business/ (d) (f) (g) (h)
Basis for depreciation Elected
Type of property (list Date placed in investment Cost or other Recovery Method/ Depreciation
(business/investment section 179
vehicles first) service use basis period Convention deduction
use only) cost
percentage
25 Special allowance for certain aircraft, certain property with a long production period, and qualified NYL or GO Zone
property placed in service during the tax year and used more than 50% in a qualified business use (see instructions) . . . 25
26 Property used more than 50% in a qualified business use:
%
%
%
27 Property used 50% or less in a qualified business use:
% S/L -
% S/L -
% S/L -
28 Add amounts in column (h), lines 25 through 27. Enter here and on line 21, page 1 . . . . . . . . . . 28
29 Add amounts in column (i), line 26. Enter here and on line 7, page 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section B Information on Use of Vehicles
Complete this section for vehicles used by a sole proprietor, partner, or other more than 5% owner, or related person.
If you provided vehicles to your employees, first answer the questions in Section C to see if you meet an exception to completing this section for those vehicles.
30 Total business/investment miles driven (a) (b) (c) (d) (e) (f)
Vehicle 1 Vehicle 2 Vehicle 3 Vehicle 4 Vehicle 5 Vehicle 6
during the year (do not include commuting
miles) . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 Total commuting miles driven during the year . . .
32 Total other personal (noncommuting) miles
driven . . . . . . . . . . . . . . . . . . . . . . . . . . .
33 Total miles driven during the year. Add
lines 30 through 32 . . . . . . . . . . . . . . . . . . .
34 Was the vehicle available for personal use Yes No Yes No Yes No Yes No Yes No Yes No
during off-duty hours? . . . . . . . . . . . . . . . . .
35 Was the vehicle used primarily by a more
than 5% owner or related person?. . . . . . . . . .
36 Is another vehicle available for personal
use? . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section C Questions for Employers Who Provide Vehicles for Use by Their Employees
Answer these questions to determine if you meet an exception to completing Section B for vehicles used by employees who are not more
than 5% owners or related persons (see instructions).
37 Do you maintain a written policy statement that prohibits all personal use of vehicles, including commuting, by your Yes No
employees? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38 Do you maintain a written policy statement that prohibits personal use of vehicles, except commuting, by your
employees? See the instructions for vehicles used by corporate officers, directors, or 1% or more owners . . . . . . . . .
39 Do you treat all use of vehicles by employees as personal use? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40 Do you provide more than five vehicles to your employees, obtain information from your employees about the use
of the vehicles, and retain the information received? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41 Do you meet the requirements concerning qualified automobile demonstration use? (See instructions.) . . . . . . . . . .
Note: If your answer to 37, 38, 39, 40, or 41 is Yes, do not complete Section B for the covered vehicles.
Part VI Amortization
(e)
(b) (c) (d) (f)
(a) Amortization
Date amortization Amortizable Code Amortization for
Description of costs period or
begins amount section this year
percentage
42 Amortization of costs that begins during your 2005 tax year (see instructions):
43 Amortization of costs that began before your 2005 tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

44 Total. Add amounts in column (f). See the instructions for where to report . . . . . . . . . . . . . . . . . . . . . 44 0.00
Form 4562 (2005) (Rev. 1-2006)
STF FED5085F.2
SCHEDULE SE OMB No. 1545-0074
(Form 1040)
Self-Employment Tax 2005
Attachment
Internal Revenue Service (99) u Attach to Form 1040. u See Instructions for Schedule SE (Form 1040). Sequence No. 17
Name of person with self-employment income (as shown on Form 1040) Social security number of person
with self-employment income u
Who Must File Schedule SE

You must file Schedule SE if:
You had net earnings from self-employment from other than church employee income (line 4 of Short Schedule SE or line 4c of
Long Schedule SE) of $400 or more, or
You had church employee income of $108.28 or more. Income from services you performed as a minister or a member of a
religious order is not church employee income (see page SE-1).
Note. Even if you had a loss or a small amount of income from self-employment, it may be to your benefit to file Schedule SE and
use either optional method in Part II of Long Schedule SE (see page SE-3).
Exception. If your only self-employment income was from earnings as a minister, member of a religious order, or Christian Science
practitioner and you filed Form 4361 and received IRS approval not to be taxed on those earnings, do not file Schedule SE. Instead,
write ExemptForm 4361 on Form 1040, line 58.
May I Use Short Schedule SE or Must I Use Long Schedule SE?

Did You Receive Wages or Tips in 2005?
No Yes
q q q
Are you a minister, member of a religious order, or Christian
Yes Was the total of your wages and tips subject to social security Yes
Science practitioner who received IRS approval not to be taxed
u or railroad retirement tax plus your net earnings from u
on earnings from these sources, but you owe self-employment
tax on other earnings? self-employment more than $90,000?
No
q
Are you using one of the optional methods to figure your net Yes No
u
earnings (see page SE-3)? q
No Did you receive tips subject to social security or Medicare tax Yes
t u
No that you did not report to your employer?
q
Did you receive church employee income reported on Form Yes
u
W-2 of $108.28 or more?
No
q q
You May Use Short Schedule SE Below u You Must Use Long Schedule SE on page 2
Section AShort Schedule SE. Caution. Read above to see if you can use Short Schedule SE.
1 Net farm profit or (loss) from Schedule F, line 36, and farm partnerships, Schedule K-1 (Form
1065), box 14, code A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065),
box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9. Ministers and
members of religious orders, see page SE-1 for amounts to report on this line. See page SE-2
for other income to report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Combine lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00
4 Net earnings from self-employment. Multiply line 3 by 92.35% (.9235). If less than $400,
do not file this schedule; you do not owe self-employment tax . . . . . . . . . . . . . . . . . . . . . u 4 0.00
5 Self-employment tax. If the amount on line 4 is:
}
$90,000 or less, multiply line 4 by 15.3% (.153). Enter the result here and on
Form 1040, line 58. ....... 5
More than $90,000, multiply line 4 by 2.9% (.029). Then, add $11,160.00 to the
result. Enter the total here and on Form 1040, line 58.
6 Deduction for one-half of self-employment tax. Multiply line 5 by

50% (.5). Enter the result here and on Form 1040, line 27 . . . . . . . . . 6
For Paperwork Reduction Act Notice, see Form 1040 instructions. Schedule SE (Form 1040) 2005
ISA
STF FED2633F.1
Schedule SE (Form 1040) 2005 Attachment Sequence No. 17 Page 2
Name of person with self-employment income (as shown on Form 1040) Social security number of person
with self-employment income u
Section BLong Schedule SE
Part I Self-Employment Tax

Note. If your only income subject to self-employment tax is church employee income, skip lines 1 through 4b. Enter -0- on line
4c and go to line 5a. Income from services you performed as a minister or a member of a religious order is not church employee
income. See page SE-1.
A If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you
had $400 or more of other net earnings from self-employment, check here and continue with Part I . . . . . . . . . . . . . u
1 Net farm profit or (loss) from Schedule F, line 36, and farm partnerships, Schedule K-1 (Form
1065), box 14, code A. Note. Skip this line if you use the farm optional method (see page SE-4) 1
2 Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box
14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9. Ministers and members
of religious orders, see page SE-1 for amounts to report on this line. See page SE-2 for other
income to report. Note. Skip this line if you use the nonfarm optional method (see page SE-4) 2
3 Combine lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4a If line 3 is more than zero, multiply line 3 by 92.35% (.9235). Otherwise, enter amount from line 3 4a
b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here . . . . . 4b
c Combine lines 4a and 4b. If less than $400, stop; you do not owe self-employment tax. Exception.
If less than $400 and you had church employee income, enter -0- and continue . . . . . . . . . . . . u 4c
5a Enter your church employee income from Form W-2. See page SE-1
for definition of church employee income . . . . . . . . . . . . . . . . . . . . . . . . . 5a
b Multiply line 5a by 92.35% (.9235). If less than $100, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . 5b
6 Net earnings from self-employment. Add lines 4c and 5b . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Maximum amount of combined wages and self-employment earnings subject to social security
tax or the 6.2% portion of the 7.65% railroad retirement (tier 1) tax for 2005 . . . . . . . . . . . . . . 7 90,000.00
8a Total social security wages and tips (total of boxes 3 and 7 on Form(s)
W-2) and railroad retirement (tier 1) compensation. If $90,000 or more,
skip lines 8b through 10, and go to line 11 . . . . . . . . . . . . . . . . . . . 8a
b Unreported tips subject to social security tax (from Form 4137, line 9) 8b
c Add lines 8a and 8b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8c
9 Subtract line 8c from line 7. If zero or less, enter -0- here and on line 10 and go to line 11 . u 9
10 Multiply the smaller of line 6 or line 9 by 12.4% (.124) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Multiply line 6 by 2.9% (.029) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Self-employment tax. Add lines 10 and 11. Enter here and on Form 1040, line 58 . . . . . . . . . 12
13 Deduction for one-half of self-employment tax. Multiply line 12 by
50% (.5). Enter the result here and on Form 1040, line 27 . . . . . . . . 13
Part II Optional Methods To Figure Net Earnings (see page SE-3)
Farm Optional Method. You may use this method only if (a) your gross farm income1 was not more
than $2,400 or (b) your net farm profits2 were less than $1,733.
14 Maximum income for optional methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1,600.00
15 Enter the smaller of: two-thirds (2/3) of gross farm income1 (not less than zero) or $1,600. Also
include this amount on line 4b above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits3 were less
than $1,733 and also less than 72.189% of your gross nonfarm income4 and (b) you had net earnings
from self-employment of at least $400 in 2 of the prior 3 years.
Caution. You may use this method no more than five times.
16 Subtract line 15 from line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Enter the smaller of: two-thirds (2/3) of gross nonfarm income4 (not less than zero) or the amount
on line 16. Also include this amount on line 4b above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1 3
From Sch. F, line 11, and Sch. K-1 (Form 1065), From Sch. C, line 31; Sch. C-EZ, line 3; Sch. K-1 (Form 1065), box 14, code A; and
box 14, code B. Sch. K-1 (Form 1065-B), box 9.
2 4
From Sch. F, line 36, and Sch. K-1 (Form 1065), From Sch. C, line 7; Sch. C-EZ, line 1; Sch. K-1 (Form 1065), box 14, code C; and Sch.
box 14, code A. K-1 (Form 1065-B), box 9.
Schedule SE (Form 1040) 2005
STF FED2633F.2
4797 Sales of Business Property OMB No. 1545-0184
2005
Form
(Also Involuntary Conversions and Recapture Amounts
Under Sections 179 and 280F(b)(2))
Department of the Treasury Attachment
Internal Revenue Service (99) Attach to your tax return. See separate instructions. Sequence No. 27
Name(s) shown on return Identifying number
1 Enter the gross proceeds from sales or exchanges reported to you for 2005 on Form(s) 1099-B or 1099-S (or substitute
statement) that you are including on line 2, 10, or 20 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Part I Sales or Exchanges of Property Used in Trade or Business and Involuntary Conversions From Other
Than Casualty or Theft Most Property Held More Than 1 Year (see instructions)
(e) Depreciation (f) Cost or other
(g) Gain or (loss)
(a) Description (b) Date acquired (c) Date sold (d) Gross allowed or basis, plus
Subtract (f) from the
of property (mo., day, yr.) (mo., day, yr.) sales price allowable since improvements and
sum of (d) and (e)
acquisition expense of sale
2
3 Gain, if any, from Form 4684, line 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4 Section 1231 gain from installment sales from Form 6252, line 26 or 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Section 1231 gain or (loss) from like-kind exchanges from Form 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Gain, if any, from line 32, from other than casualty or theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Combine lines 2 through 6. Enter the gain or (loss) here and on the appropriate line as follows: . . . . . . . . . . . . . . . . . . . 7 0.00
Partnerships (except electing large partnerships) and S corporations. Report the gain or (loss) following the
instructions for Form 1065, Schedule K, line 10, or Form 1120S, Schedule K, line 9. Skip lines 8, 9, 11, and 12 below.
Individuals, partners, S corporation shareholders, and all others. If line 7 is zero or a loss, enter the amount from
line 7 on line 11 below and skip lines 8 and 9. If line 7 is a gain and you did not have any prior year section 1231
losses, or they were recaptured in an earlier year, enter the gain from line 7 as a long-term capital gain on the
Schedule D filed with your return and skip lines 8, 9, 11, and 12 below.
8 Nonrecaptured net section 1231 losses from prior years (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Subtract line 8 from line 7. If zero or less, enter -0-. If line 9 is zero, enter the gain from line 7 on line 12 below. If line 9
is more than zero, enter the amount from line 8 on line 12 below and enter the gain from line 9 as a long-term capital
gain on the Schedule D filed with your return (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Part II Ordinary Gains and Losses (see instructions)
10 Ordinary gains and losses not included on lines 11 through 16 (include property held 1 year or less):
11 Loss, if any, from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ( )

12 Gain, if any, from line 7 or amount from line 8, if applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Gain, if any, from line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 0.00
14 Net gain or (loss) from Form 4684, lines 34 and 41a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Ordinary gain from installment sales from Form 6252, line 25 or 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Ordinary gain or (loss) from like-kind exchanges from Form 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Combine lines 10 through 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 0.00
18 For all except individual returns, enter the amount from line 17 on the appropriate line of your return and skip lines a
and b below. For individual returns, complete lines a and b below:
a If the loss on line 11 includes a loss from Form 4684, line 38, column (b)(ii), enter that part of the loss here. Enter the
part of the loss from income-producing property on Schedule A (Form 1040), line 27, and the part of the loss from
property used as an employee on Schedule A (Form 1040) line 22. Identify as from Form 4797, line 18a. See
instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18a
b Redetermine the gain or (loss) on line 17 excluding the loss, if any, on line 18a. Enter here and on Form 1040,
line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18b
For Paperwork Reduction Act Notice, see separate instructions. Form 4797 (2005)
ISA
STF FED5267F.1
Form 4797 (2005) Page 2
Part III Gain From Disposition of Property Under Sections 1245, 1250, 1252, 1254, and 1255
(see instructions)
(b) Date acquired (c) Date sold
19 (a) Description of section 1245, 1250, 1252, 1254, or 1255 property: (mo., day, yr.) (mo., day, yr.)
A
B
C
D
Thesecolumnsrelate to the propertieson lines19A through 19D. Property A Property B Property C Property D
20 Gross sales price (Note: See line 1 before completing.) . . . . . 20
21 Cost or other basis plus expense of sale . . . . . . . . . . . . . . . . . 21
22 Depreciation (or depletion) allowed or allowable . . . . . . . . . . . 22
23 Adjusted basis. Subtract line 22 from line 21 . . . . . . . . . . . . . . 23
24 Total gain. Subtract line 23 from line 20 . . . . . . . . . . . . . . . . . . 24

25 If section 1245 property:
a Depreciation allowed or allowable from line 22 . . . . . . . . . . . . 25a
b Enter the smaller of line 24 or 25a . . . . . . . . . . . . . . . . . . . . . 25b
26 If section 1250 property: If straight line depreciation was used,
enter -0- on line 26g, except for a corporation subject to section 291.
a Additional depreciation after 1975 (see instructions) . . . . . . . . 26a
b Applicable percentage multiplied by the smaller of line 24 or
line 26a (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26b
c Subtract line 26a from line 24. If residential rental property or
line 24 is not more than line 26a, skip lines 26d and 26e . . . . 26c
d Additional depreciation after 1969 and before 1976 . . . . . . . . 26d
e Enter the smaller of line 26c or 26d . . . . . . . . . . . . . . . . . . . . . 26e
f Section 291 amount (corporations only) . . . . . . . . . . . . . . . . . 26f
g Add lines 26b, 26e, and 26f . . . . . . . . . . . . . . . . . . . . . . . . . . . 26g
27 If section 1252 property: Skip this section if you did not
dispose of farmland or if this form is being completed for a
partnership (other than an electing large partnership).
a Soil, water, and land clearing expenses . . . . . . . . . . . . . . . . . . 27a
b Line 27a multiplied by applicable percentage (see instructions) 27b
c Enter the smaller of line 24 or 27b . . . . . . . . . . . . . . . . . . . . . 27c
a Intangible drilling and development costs, expenditures for
development of mines and other natural deposits, and mining
exploration costs (see instructions) . . . . . . . . . . . . . . . . . . . . . 28a
b Enter the smaller of line 24 or 28a . . . . . . . . . . . . . . . . . . . . . 28b
a Applicable percentage of payments excluded from income
under section 126 (see instructions) . . . . . . . . . . . . . . . . . . . . 29a
b Enter the smaller of line 24 or 29a (see instructions) . . . . . . . 29b
Summary of Part III Gains. Complete property columns A through D through line 29b before going to line 30.
30 Total gains for all properties. Add property columns A through D, line 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 0.00
31 Add property columns A through D, lines 25b, 26g, 27c, 28b, and 29b. Enter here and on line 13 . . . . . . . . . . . . . . . . . . . 31 0.00
32 Subtract line 31 from line 30. Enter the portion from casualty or theft on Form 4684, line 36. Enter the portion from other
than casualty or theft on Form 4797, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 0.00
Part IV Recapture Amounts Under Sections 179 and 280F(b)(2) When Business Use Drops to 50% or Less
(see instructions)
(a) Section (b) Section
179 280F(b)(2)
33 Section 179 expense deduction or depreciation allowable in prior years . . . . . . . . . . . . . . . . . . . . . . . 33
34 Recomputed depreciation (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
35 Recapture amount. Subtract line 34 from line 33. See the instructions for where to report . . . . . . . . . 35
Form 4797 (2005)
STF FED5267F.2
1120 U.S. Corporation Income Tax Return OMB No. 1545-0123
2005
Form
Department of the Treasury For calendar year 2005 or tax year beginning , 2005, ending , 20
Internal Revenue Service u See separate instructions.
A Check if: Name B Employer identification number
1 Consolidated return Use IRS
(attach Form 851) . . .
label.
2 Personal holding co. Number, street, and room or suite no. If a P.O. box, see instructions. C Date incorporated
(attach Sch. PH) . . . Otherwise,
3 Personal service corp. print or
(see instructions) . . . . type. City or town, state, and ZIP code D Total assets (see instructions)
4 Schedule M-3 required
(attach Sch. M-3) . . . . $
E Check if: (1) Initial return (2) Final return (3) Name change (4) Address change
1a Gross receipts or sales b Less returns and allowances c Bal u 1c 0.00

2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0.00
3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00
4 Dividends (Schedule C, line 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0.00
Income
5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 6
7 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 7
8 Capital gain net income (attach Schedule D (Form 1120)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . . . . . . . . . . . . . 9
10 Other income (see instructionsattach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Total income. Add lines 3 through 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .u 11 0.00
12
Deductions(See instructions for limitations on deductions.)
12 Compensation of officers (Schedule E, line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 15
16 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 Charitable contributions (see instructions for 10% limitation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20a Depreciation (attach Form 4562) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20a
b Less depreciation claimed on Schedule A and elsewhere on return . . . . . . 20b 20c 0.00
21 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
23 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
24 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
25 Domestic production activities deduction (attach Form 8903) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
26 Other deductions (attach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
27 Total deductions. Add lines 12 through 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 27 0.00
28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11 28 0.00
29 Less: a Net operating loss deduction (see instructions) . . . . . . . . . . . . 29a
b Special deductions (Schedule C, line 20) . . . . . . . . . . . . . . . . . 29b 0.00 29c 0.00
30 Taxable income. Subtract line 29c from line 28 (see instructions if Schedule C, line 12, was completed) 30 0.00
31 Total tax (Schedule J, line 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 0.00
Payments: a 2004 overpayment credited to 2005 . 32a
Tax and Payments
32
b 2005 estimated tax payments . . . . . . 32b
c Less 2005 refund applied for on Form 4466 32c ( ) d Bal u 32d 0.00
e Tax deposited with Form 7004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32e
f Credits: (1) Form 2439 (2) Form 4136 32f 32g 0.00
33 Estimated tax penalty (see instructions). Check if Form 2220 is attached . . . . . . . . . . . . . . u 33
34 Tax due. If line 32g is smaller than the total of lines 31 and 33, enter amount owed . . . . . . . . . . . . 34 0.00
35 Overpayment.If line 32g is larger than the total of lines 31 and 33, enter amount overpaid . . . . . . . 35 0.00
36 Enter amount of line 35 you want: Credited to 2006 estimated tax u Refunded u 36 0.00
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign May the IRS discuss this return
Here
u Signature of officer Date Title u with the preparer shown below
(see instructions)? Yes No
u
Date Preparers SSN or PTIN
Paid Preparers Check if
signature self-employed
Preparers Firms name (or
Use Only yours if self-employed),
address, and ZIP code u EIN
Phone no.
For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. Form 1120 (2005)
ISA
STF FED3903F.1
Form 1120 (2005) Page 2
Schedule A Cost of Goods Sold (see instructions)
1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 2
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Additional section 263A costs (attach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Other costs (attach schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Total. Add lines 1 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0.00
7 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on page 1, line 2 . . . . . . . . . . . . . 8 0.00
9a Check all methods used for valuing closing inventory:
(i) Cost
(ii) Lower of cost or market
(iii) Other (Specify method used and attach explanation.) u
b Check if there was a writedown of subnormal goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u
c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . . . . . . . . . . . . . . u
d If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing
inventory computed under LIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d
e If property is produced or acquired for resale, do the rules of section 263A apply to the corporation? . . . . . . . . . . . Yes No
f Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If Yes,
attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No
Schedule C Dividends and Special Deductions (see instructions) (a) Dividends
(b) %
(c) Special deductions
received (a) 5 (b)
1 Dividends from less-than-20%-owned domestic corporations (other than

debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2 Dividends from 20%-or-more-owned domestic corporations (other than debt-financed
stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
see
3 Dividends on debt-financed stock of domestic and foreign corporations . . . . . . . . . instructions
4 Dividends on certain preferred stock of less-than-20%-owned public utilities . . . . . 42

5 Dividends on certain preferred stock of 20%-or-more-owned public utilities . . . . . . 48
6 Dividends from less-than-20%-owned foreign corporations and certain FSCs . . . . . 70
7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs . . . . . 80
8 Dividends from wholly owned foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 100
9 Total. Add lines 1 through 8. See instructions for limitation . . . . . . . . . . . . . . . . . . 0.00
10 Dividends from domestic corporations received by a small business investment
company operating under the Small Business Investment Act of 1958 . . . . . . . . . . 100
11 Dividends from affiliated group members and certain FSCs. . . . . . . . . . . . . . . . . . . . . . . 100
12 Dividends from controlled foreign corporations (attach Form 8895) . . . . . . . . . . . . . . . 85
13 Dividends from foreign corporations not included on lines 3, 6, 7, 8, 11, or 12 . . . .
14 Income from controlled foreign corporations under subpart F (attach Form(s) 5471)
15 Foreign dividend gross-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16 IC-DISC and former DISC dividends not included on lines 1, 2, or 3 . . . . . . . . . . . . .
17 Other dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 Deduction for dividends paid on certain preferred stock of public utilities . . . . . . . .
19 Total dividends. Add lines 1 through 17. Enter here and on page 1, line 4 . . . . . . u 0.00
20 Total special deductions. Add lines 9, 10, 11, 12, and 18. Enter here and on page 1, line 29b . . . . . . . . . . . . . . u 0.00
Schedule E Compensation of Officers (see instructions for page 1, line 12)
Note: Complete Schedule E only if total receipts (line 1a plus lines 4 through 10 on page 1) are $500,000 or more.
(c) Percent of Percent of corporation
stock owned
(a) Name of officer (b) Social security number time devoted to (f) Amount of compensation
business (d) Common (e) Preferred
1 % % %
% % %
% % %
% % %
% % %
2 Total compensation of officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 Compensation of officers claimed on Schedule A and elsewhere on return . . . . . . . . . . . . . . . . . . . . . .
4 Subtract line 3 from line 2. Enter the result here and on page 1, line 12. . . . . . . . . . . . . . . . . . . . . . . .
Form 1120 (2005)
STF FED3903F.2
Form 1120 (2005) Page 3
Schedule J Tax Computation (see instructions)
1 Check if the corporation is a member of a controlled group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u
Important: Members of a controlled group, see instructions.
2a If the box on line 1 is checked, enter the corporations share of the $50,000, $25,000, and $9,925,000 taxable
income brackets (in that order):
(1) $ (2) $ (3) $
b Enter the corporations share of: (1) Additional 5% tax (not more than $11,750) $
(2) Additional 3% tax (not more than $100,000) $
3 Income tax. Check if a qualified personal service corporation (see instructions) . . . . . . . . . . . . . . . . . . u 3
4 Alternative minimum tax (attach Form 4626) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Add lines 3 and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 5 0.00
6a Foreign tax credit (attach Form 1118) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a
b Possessions tax credit (attach Form 5735) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b
c Credits from: Form 8834 Form 8907, line 23 . . . . . . . . . . . . 6c
d General business credit. Check box(es) and indicate which forms are attached:
Form 3800 Form(s) (specify) u 6d
e Credit for prior year minimum tax (attach Form 8827) . . . . . . . . . . . . . . . . . . . . 6e
f Bond credits from: Form 8860 Form 8912 . . . . . . . . . . . . . . . . . . . . . 6f
7 Total credits. Add lines 6a through 6f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 0.00
8 Subtract line 7 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 8 0.00
9 Personal holding company tax (attach Schedule PH (Form 1120)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Other taxes. Check if from: Form 4255 Form 8611 Form 8697
Form 8866 Form 8902 Other (attach schedule) . . . 10
11 Total tax. Add lines 8 through 10. Enter here and on page 1, line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 0.00
Schedule K Other Information (see instructions)
1 Check accounting method: a Cash Yes No 7 At any time during the tax year, did one foreign person Yes No
b Accrual c Other (specify) u own, directly or indirectly, at least 25% of (a) the total
voting power of all classes of stock of the corporation
2 See the instructions and enter the:
entitled to vote or (b) the total value of all classes of stock
a Business activity code no. u of the corporation? . . . . . . . . . . . . . . . . . . . . . . . . . .
b Business activity u If Yes, enter: (a) Percentage owned u
c Product or service u and (b) Owners country u
3 At the end of the tax year, did the corporation own, c The corporation may have to file Form 5472, Information
directly or indirectly, 50% or more of the voting stock of Return of a 25% Foreign-Owned U.S. Corporation or a
a domestic corporation? (For rules of attribution, see Foreign Corporation Engaged in a U.S. Trade or Business.
section 267(c).) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter number of Forms 5472 attached u
If Yes, attach a schedule showing: (a) name and 8 Check this box if the corporation issued publicly offered
employer identification number (EIN), (b) percentage debt instruments with original issue discount . . . u
owned, and (c) taxable income or (loss) before NOL and
special deductions of such corporation for the tax year If checked, the corporation may have to file Form 8281,
ending with or within your tax year. Information Return for Publicly Offered Original Issue
Discount Instruments.
4 Is the corporation a subsidiary in an affiliated group or a 9 Enter the amount of tax-exempt interest received or
parent-subsidiary controlled group? . . . . . . . . . . . . . . accrued during the tax year u $
If Yes, enter name and EIN of the parent
10 Enter the number of shareholders at the end of the tax
corporation u
year (if 100 or fewer) u
11 If the corporation has an NOL for the tax year and is
5 At the end of the tax year, did any individual, partnership,
corporation, estate, or trust own, directly or indirectly, electing to forego the carryback period, check here u
50% or more of the corporations voting stock? (For rules If the corporation is filing a consolidated return, the statement
of attribution, see section 267(c).) . . . . . . . . . . . . . . . required by Temporary Regulations section 1.1502-21T(b)(3)
If Yes, attach a schedule showing name and identifying must be attached or the election will not be valid.
number. (Do not include any information already entered
in 4 above.) Enter percentage owned u 12 Enter the available NOL carryover from prior tax years
6 During this tax year, did the corporation pay dividends (other (Do not reduce it by any deduction on line
than stock dividends and distributions in exchange for stock) 29a.) u $
in excess of the corporations current and accumulated 13 Are the corporations total receipts (line 1a plus lines 4
earnings and profits? (See sections 301 and 316.) . . . . . through 10 on page 1) for the tax year and its total assets
If Yes, file Form 5452, Corporate Report of at the end of the tax year less than $250,000? . . . . . .
Nondividend Distributions. If Yes, the corporation is not required to complete
If this is a consolidated return, answer here for the parent Schedules L, M-1, and M-2 on page 4. Instead, enter the
corporation and on Form 851, Affiliations Schedule, for total amount of cash distributions and the book value of
each subsidiary. property distributions (other than cash) made during the
tax year. u $
Note: If the corporation, at any time during the tax year, had assets or operated a business in a foreign country or U.S. possession,it may be
required to attach Schedule N (Form 1120), Foreign Operations of U.S. Corporations, to this return. See Schedule N for details.
Form 1120 (2005)
STF FED3903F.3
Form 1120 (2005) Page 4
Note: The corporation is not required to complete Schedules L, M-1, and M-2 if Question 13 on Schedule K is answered Yes.
Schedule L Balance Sheets per Books Beginning of tax year End of tax year
Assets (a) (b) (c) (d)
1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a Trade notes and accounts receivable . . . . .
( ) ( )
b Less allowance for bad debts . . . . . . . . . . .
3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 U.S. government obligations . . . . . . . . . . . .
5 Tax-exempt securities (see instructions) . . .
6 Other current assets (attach schedule) . . . .
7 Loans to shareholders . . . . . . . . . . . . . . . .
8 Mortgage and real estate loans . . . . . . . . .
9 Other investments (attach schedule) . . . . . .
10a Buildings and other depreciable assets . . . .
b Less accumulated depreciation. . . . . . . . . . ( ) ( )
11a Depletable assets . . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . . . ( ) ( )
12 Land (net of any amortization) . . . . . . . . . .
13a Intangible assets (amortizable only) . . . . . .
b Less accumulated amortization . . . . . . . . . . ( ) ( )
14 Other assets (attach schedule) . . . . . . . . . .
15 Total assets . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Shareholders Equity
16 Accounts payable . . . . . . . . . . . . . . . . . . . .
17 Mortgages, notes, bonds payable in less than 1 year
18 Other current liabilities (attach schedule) . .
19 Loans from shareholders . . . . . . . . . . . . . .
20 Mortgages, notes, bonds payable in 1 year or more
21 Other liabilities (attach schedule) . . . . . . . .
22 Capital stock: a Preferred stock . . . . . . .
b Common stock . . . . . . .
23 Additional paid-in capital . . . . . . . . . . . . . .
24 Retained earningsAppropriated (attach schedule)
25 Retained earningsUnappropriated . . . . . .
26 Adjustments to shareholders equity (attach schedule)
27 Less cost of treasury stock . . . . . . . . . . . . ( ) ( )
28 Total liabilities and shareholders equity . . .
Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return (see instructions)
1 Net income (loss) per books . . . . . . . . . . . . 7 Income recorded on books this year not
2 Federal income tax per books . . . . . . . . . . included on this return (itemize):
3 Excess of capital losses over capital gains . Tax-exempt interest $
4 Income subject to tax not recorded on books
this year (itemize):
8 Deductions on this return not charged
5 Expenses recorded on books this year not against book income this year (itemize):
deducted on this return (itemize): a Depreciation . . . . . . . . . . $
a Depreciation $ b Charitable contributions $
b Charitable contributions $
c Travel and entertainment $
9 Add lines 7 and 8 . . . . . . . . . . . . . . . .
6 Add lines 1 through 5 . . . . . . . . . . . . . . . . . . 10 Income (page 1, line 28)line 6 less line 9
Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L)
1 Balance at beginning of year . . . . . . . . . . . 5 Distributions: a Cash . . . . . . . . . . .
2 Net income (loss) per books . . . . . . . . . . . . b Stock . . . . . . . . . .
3 Other increases (itemize): c Property . . . . . . . .
6 Other decreases (itemize):
7 Add lines 5 and 6 . . . . . . . . . . . . . . . .
4 Add lines 1, 2, and 3 . . . . . . . . . . . . . . . . . . 8 Balance at end of year (line 4 less line 7)
Form 1120 (2005)
STF FED3903F.4
U.S. Income Tax Return for an S Corporation
Form 1120S u Do not file this form unless the corporation has filed Form 2553
OMB No. 1545-0130

Internal Revenue Service
to elect to be an S corporation.
u See separate instructions.
2005
For calendar year 2005, or tax year beginning , 2005, ending , 20
A Effective date of S Name C Employer identification number
election Use the
IRS
label. Number, street, and room or suite no. If a P.O. box, see instructions. D Date incorporated
Other-
B Business code wise,
number (see print or City or town, state, and ZIP code E Total assets (see instructions)
instructions)
type.
$
F Check applicable boxes: (1) Initial return (2) Final return (3) Name change (4) Address change (5) Amended return
G Enter number of shareholders in the corporation at end of the tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u
Caution. Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information.
1a Gross receipts or sales b Less returns and allowances c Bal u 1c 0.00
2 0.00
Income
2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00
4 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . . . . . . . . . . 4
5 Other income (loss) (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Total income (loss). Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 6 0.00
7 Compensation of officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Deductions (see the instructions for limitations)
9 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14a Depreciation (attach Form 4562) . . . . . . . . . . . . . . . . . . . . . . . . . 14a
b Depreciation claimed on Schedule A and elsewhere on return . . . 14b
c Subtract line 14b from line 14a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c 0.00
15 Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20 Total deductions. Add the amounts shown in the far right column for lines 7 through 19 u 20 0.00
21 Ordinary business income (loss).Subtract line 20 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . 21 0.00
22 Tax: a Excess net passive income tax (attach statement) . . . . . . 22a
b Tax from Schedule D (Form 1120S) . . . . . . . . . . . . . . . . . . . . . . 22b
Tax and Payments
c Add lines 22a and 22b (see the instructions for additional taxes) . . . . . . . . . . . . . . . . . . . . . 22c 0.00
23 Payments: a 2005 estimated tax payments and amount applied from 2004 return 23a
b Tax deposited with Form 7004 . . . . . . . . . . . . . . . . . . . . . . . . . . 23b
c Credit for Federal tax paid on fuels (attach Form 4136) . . . . . . . . 23c
d Add lines 23a through 23c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23d 0.00
24 Estimated tax penalty (see instructions). Check if Form 2220 is attached . . . . . . . . . . . . u 24
25 Tax due. If line 23d is smaller than the total of lines 22c and 24, enter amount owed. . . . . . . 25 0.00
26 Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid 26 0.00
27 Enter amount of line 26 you want: Credited to 2006 estimated tax u Refunded u 27 0.00
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Here with the preparer shown below
u Signature of officer Date Title u (see instructions)? Yes No
Paid
Preparers
signature u Date
Check if
self-employed
Preparers SSN or PTIN
Preparers
u
Firms name (or EIN
yours if self-employed),
Use Only address, and ZIP code Phone no.
For Privacy Act and Paperwork Reduction Act Notice, see the separate instructions. Form 1120S (2005)
ISA
STF FED4219F.1
Form 1120S (2005) Page 2
Schedule A Cost of Goods Sold (see instructions)
1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Additional section 263A costs (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Other costs (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Total. Add lines 1 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0.00
7 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on page 1, line 2 . . . . . . . . . . . . . 8 0.00
9a Check all methods used for valuing closing inventory: (i) Cost as described in Regulations section 1.471-3
(ii) Lower of cost or market as described in Regulations section 1.471-4
(iii) Other (specify method used and attach explanation) u
b Check if there was a writedown of subnormal goods as described in Regulations section 1.471-2(c) . . . . . . . . . . . . . . . . . u
c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . . . . . . . . . . . u
d If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing
inventory computed under LIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d
e If property is produced or acquired for resale, do the rules of Section 263A apply to the corporation? . . . . . . . . . . Yes No
f Was there any change in determining quantities, cost, or valuations between opening and closing inventory? . . . . Yes No
If Yes, attach explanation.
Schedule B Other Information (see instructions) Yes No
1 Check method of accounting: (a) Cash (b) Accrual (c) Other (specify) u
2 See the instructions and enter the:
(a) Business activity u (b) Product or service u
3 At the end of the tax year, did the corporation own, directly or indirectly, 50% or more of the voting stock of a domestic
corporation? (For rules of attribution, see section 267(c).) If Yes, attach a statement showing: (a) name, address,
and employer identification number and (b) percentage owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Was the corporation a member of a controlled group subject to the provisions of section 1561? . . . . . . . . . . . . . . .
5 Has this corporation filed, or is it required to file, a return under section 6111 to provide information on any reportable
transaction? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 Check this box if the corporation issued publicly offered debt instruments with original issue discount . . . . u
If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount
Instruments.
7 If the corporation: (a) was a C corporation before it elected to be an S corporation or the corporation acquired an
asset with a basis determined by reference to its basis (or the basis of any other property) in the hands of a
C corporation and (b) has net unrealized built-in gain (defined in section 1374(d)(1)) in excess of the net recognized
built-in gain from prior years, enter the net unrealized built-in gain reduced by net recognized built-in gain from prior
years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u $
8 Check this box if the corporation had accumulated earnings and profits at the close of the tax year . . . . . . u
9 Are the corporations total receipts (see instructions) for the tax year and its total assets at the end of the tax year
less than $250,000? If Yes, the corporation is not required to complete Schedules L and M-1.
Note: If the corporation had assets or operated a business in a foreign country or U.S. possession, it may be required to attach
Schedule N (Form 1120), Foreign Operations of U.S. Corporations, to this return. See Schedule N for details.
Schedule K Shareholders Shares of Income, Deductions, Credits, etc.
Shareholders Pro Rata Share Items Total amount
1 Ordinary business income (loss) (page 1, line 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0.00
2 Net rental real estate income (loss) (attach Form 8825) . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3a Other gross rental income (loss) . . . . . . . . . . . . . . . . . . . . 3a
b Expenses from other rental activities (attach statement) . . . 3b
0.00
Income (Loss)
c Other net rental income (loss). Subtract line 3b from line 3a . . . . . . . . . . . . . . . . . . . . . . 3c

4 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Dividends: a Ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5a
b Qualified dividends . . . . . . . . . . . . . . . . . . 5b
6 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Net short-term capital gain (loss) (attach Schedule D (Form 1120S)) . . . . . . . . . . . . . . . . . 7
8a Net long-term capital gain (loss) (attach Schedule D (Form 1120S)) . . . . . . . . . . . . . . . . . 8a
b Collectibles (28%) gain (loss) . . . . . . . . . . . . . . . . . . . . . . 8b
c Unrecaptured section 1250 gain (attach statement) . . . . . . 8c
9 Net section 1231 gain (loss) (attach Form 4797). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Other income (loss) (see instructions) . . . . . . Type u 10
Form 1120S (2005)
STF FED4219F.2
Form 1120S (2005) Page 3
Shareholders Pro Rata Share Items (continued) Total amount
11
Deductions
11 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12a Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12a
b Investment interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12b
c Section 59(e)(2) expenditures (1) Type u (2) Amount u 12c(2)
d Other deductions (see instructions) . . . . . . . . . Type u 12d
13a Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13a
Credits & Credit
b Low-income housing credit (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13b

Recapture
c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468). . . . . . . . . . . . 13c
d Other rental real estate credits (see instructions) . . Type u 13d
e Other rental credits (see instructions) . . . . . . . . Type u 13e
f Credit for alcohol used as fuel (attach Form 6478) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13f
g Other credits and credit recapture (see instructions) Type u 13g
14a Name of country or U.S. possession u
b Gross income from all sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14b
c Gross income sourced at shareholder level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c
Foreign gross income sourced at corporate level:
d Passive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14d
Foreign Transactions
e Listed categories (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14e

f General limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14f
Deductions allocated and apportioned at shareholder level:
g Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14g
h Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14h
Deductions allocated and apportioned at corporate level to foreign source income:
i Passive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14i
j Listed categories (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14j
k General limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14k
Other information:
l Total foreign taxes (check one): u Paid Accrued . . . . . . . . . . . . . . . . . . . . . . . 14l
m Reduction in taxes available for credit (attach statement). . . . . . . . . . . . . . . . . . . . . . . . . 14m
n Other foreign tax information (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15a Post-1986 depreciation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15a
Minimum Tax
b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15b

(AMT) Items
Alternative
c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15c

d Oil, gas, and geothermal propertiesgross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15d
e Oil, gas, and geothermal propertiesdeductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15e
f Other AMT items (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15f
Items Affecting
16a Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16a

Shareholder
b Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16b

Basis
c Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16c

d Property distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16d
e Repayment of loans from shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16e
Other Information
17a Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17a

b Investment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17b
c Dividend distributions paid from accumulated earnings and profits . . . . . . . . . . . . . . . . . 17c
d Other items and amounts (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
e Income/loss reconciliation. (Required only if Schedule M-1 must be completed.) Combine
the amounts on lines 1 through 10 in the far right column. From the result, subtract the
sum of the amounts on lines 11 through 12d and 14l . . . . . . . . . . . . . . . . . . . . . . . . . . . 17e
Form 1120S (2005)
STF FED4219F.3
Form 1120S (2005) Page 4
Note: The corporation is not required to complete Schedules L and M-1 if question 9 of Schedule B is answered Yes.
1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a Trade notes and accounts receivable . . . .
b Less allowance for bad debts . . . . . . . . . .
3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . .
4 U.S. government obligations . . . . . . . . . . .
5 Tax-exempt securities . . . . . . . . . . . . . .
6 Other current assets (attach statement) . . .
7 Loans to shareholders . . . . . . . . . . . . . . .
8 Mortgage and real estate loans . . . . . . . . .
9 Other investments (attach statement) . . . .
10a Buildings and other depreciable assets . . .
b Less accumulated depreciation . . . . . . . .
11a Depletable assets . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . .
12 Land (net of any amortization) . . . . . . . . . .
13a Intangible assets (amortizable only) . . . . . .
b Less accumulated amortization . . . . . . . . .
14 Other assets (attach statement) . . . . . . . .
15 Total assets . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Shareholders Equity
16 Accounts payable . . . . . . . . . . . . . . . . . . .
18 Other current liabilities (attach statement)
19 Loans from shareholders . . . . . . . . . . . . .
21 Other liabilities (attach statement) . . . . . . .
22 Capital stock . . . . . . . . . . . . . . . . . . . . . .
23 Additional paid-in capital . . . . . . . . . . . . .
24 Retained earnings. . . . . . . . . . . . . . . . . . .
25 Adjustments to shareholders equity (attach statement)
26 Less cost of treasury stock . . . . . . . . . . . . ( ) ( )
27 Total liabilities and shareholders equity . . . . .
Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return
1 Net income (loss) per books . . . . . . . . . . . 5 Income recorded on books this year not included
2 Income included on Schedule K, lines 1, 2, 3c, 4, on Schedule K, lines 1 through 10 (itemize):
5a, 6, 7, 8a, 9, and 10, not recorded on books this a Tax-exempt interest $
year (itemize):
3 Expenses recorded on books this year not 6 Deductions included on Schedule K, lines
included on Schedule K, lines 1 through 12 1 through 12 and 14l, not charged against
and 14l (itemize): book income this year (itemize):
a Depreciation $ a Depreciation $
b Travel and entertainment $
7 Add lines 5 and 6 . . . . . . . . . . . . . . . . .
4 Add lines 1 through 3 .............. 8 Income (loss) (Schedule K, line 17e). Line 4 less line 7
Analysisof Accumulated Adjustments Account, Other Adjustments Account, and Shareholders
Schedule M-2
Undistributed Taxable Income PreviouslyTaxed (see instructions)
(a) Accumulated (b) Other adjustments (c) Shareholders undistributed
adjustments account account taxable income previously taxed
1 Balance at beginning of tax year . . . . . . . . .

2 Ordinary income from page 1, line 21 . . . . .
3 Other additions . . . . . . . . . . . . . . . . . . . . .
4 Loss from page 1, line 21 . . . . . . . . . . . . . . ( )
5 Other reductions . . . . . . . . . . . . . . . . . . . ( ) ( )
6 Combine lines 1 through 5 . . . . . . . . . . . . . .
7 Distributions other than dividend distributions
8 Balance at end of tax year. Subtract line 7 from line 6
Form 1120S (2005)
STF FED4219F.4
671105
Final K-1 Amended K-1 OMB No. 1545-0130
Schedule K-1
(Form 1120S) 2005 Part III Shareholders Share of Current Year Income,
Deductions, Credits, and Other Items
Department of the Treasury 1 Ordinary business income (loss) 13 Credits & credit recapture
Internal Revenue Service For calendar year 2005, or tax
year beginning , 2005
2 Net rental real estate income (loss)
ending , 20
Shareholders Share of Income, Deductions, 3 Other net rental income (loss)

Credits, etc. u See back of form and separate instructions.
4 Interest income
Part I Information About the Corporation
A Corporations employer identification number 5a Ordinary dividends
B Corporations name, address, city, state, and ZIP code 5b Qualified dividends 14 Foreign transactions
6 Royalties
7 Net short-term capital gain (loss)
C IRS Center where corporation filed return 8a Net long-term capital gain (loss)
8b Collectibles (28%) gain (loss)

D Tax shelter registration number, if any
E Check if Form 8271 is attached
8c Unrecaptured section 1250 gain
Part II Information About the Shareholder 9 Net section 1231 gain (loss)
F Shareholders identifying number
10 Other income (loss) 15 Alternative minimum tax (AMT) items
G Shareholders name, address, city, state and ZIP code
H Shareholders percentage of stock

ownership for tax year . . . . . . . . . . . . . . . . . . %
11 Section 179 deduction 16 Items affecting shareholder basis
12 Other deductions
For IRS Use Only
17 Other information
* See attached statement for additional information.

For Privacy Act and Paperwork Reduction Act Notice, see Instructions for Form 1120S. Schedule K-1 (Form 1120S) 2005
ISA
STF FED4269F.1
Schedule K-1 (Form 1120S) 2005 Page 2
This list identifies the codes used on Schedule K-1 for all shareholders and provides summarized reporting information forshareholders
who file Form 1040. For detailed reporting and filing information, see the separate Shareholders Instructions for Schedule K-1and the
instructions for your income tax return.
Code Enter on
1. Ordinary business income (loss). You must first determine whether the M Empowerment zone and renewal
income (loss) is passive or nonpassive. Then enter on your return as community employment credit Form 8844, line 3
follows: Enter on N Credit for increasing research
Passive loss See the Shareholders Instructions activities Form 6765, line 42
Passive income Schedule E, line 28, column (g) O New markets credit Form 8874, line 2
Nonpassive loss Schedule E, line 28, column (h) P Credit for employer social
Nonpassive income Schedule E, line 28, column (j) security and Medicare taxes Form 8846, line 5
Q Backup withholding Form 1040, line 64
2. Net rental real estate income (loss) See the Shareholders Instructions R Recapture of low-income
3. Other net rental income (loss) housing credit (section 42(j)(5)) Form 8611, line 8
S Recapture of low-income
Net income Schedule E, line 28, column (g)
housing credit (other) Form 8611, line 8
Net loss See the Shareholders Instructions
T Recapture of investment credit See Form 4255
4. Interest income Form 1040, line 8a U Other credits See the Shareholders Instructions
V Recapture of other credits See the Shareholders Instructions
5a. Ordinary dividends Form 1040, line 9a
5b. Qualified dividends Form 1040, line 9b 14. Foreign transactions
A Name of country or U.S.
6. Royalties Schedule E, line 4 possession Form 1116, Part I
7. Net short-term capital gain (loss) Schedule D, line 5, column (f) B Gross income from all sources Form 1116, Part I
C Gross income sourced at
8a. Net long-term capital gain (loss) Schedule D, line 12, column (f) shareholder level Form 1116, Part I
8b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4 Foreign gross income sourced at corporate level
(Schedule D instructions) D Passive Form 1116, Part l
8c. Unrecaptured section 1250 gain See the Shareholders Instructions E Listed categories Form 1116, Part I
F General limitation Form 1116, Part I
9. Net section 1231 gain (loss) See the Shareholders Instructions
Deductions allocated and apportioned at shareholder level
10. Other income (loss) G Interest expense Form 1116, Part I
Code H Other Form 1116, Part I
A Other portfolio income (loss) See the Shareholders Instructions Deductions allocated and apportioned at corporate level to foreign source
B Involuntary conversions See the Shareholders Instructions income
C Sec. 1256 contracts & straddles Form 6781, line 1 I Passive Form 1116, Part I
D Mining exploration costs recapture See Pub. 535 J Listed categories Form 1116, Part I
E Other income (loss) See the Shareholders Instructions K General limitation Form 1116, Part I
11. Section 179 deduction See the Shareholders Instructions Other information
L Total foreign taxes paid Form 1116, Part II
12. Other deductions
M Total foreign taxes accrued Form 1116, Part II
A Cash contributions (50%) Schedule A, line 15a N Reduction in taxes available for
B Cash contributions (30%) Schedule A, line 15a credit Form 1116, line 12
C Noncash contributions (50%) Schedule A, line 16 O Foreign trading gross receipts Form 8873
D Noncash contributions (30%) Schedule A, line 16 P Extraterritorial income exclusion Form 8873
E Capital gain property to a 50% Q Other foreign transactions See the Shareholders Instructions
organization (30%) Schedule A, line 16
F Capital gain property (20%) Schedule A, line 16 15. Alternative minimum tax (AMT) items
}
G Cash contributions (100%) See the Shareholders Instructions A Post-1986 depreciation adjustment
B Adjusted gain or loss See the
H Investment interest expense Form 4952, line 1
C Depletion (other than oil & gas) Shareholders
I Deductionsroyalty income Schedule E, line 18
D Oil, gas, & geothermalgross income Instructions and
J Section 59(e)(2) expenditures See the Shareholders Instructions
E Oil, gas, & geothermaldeductions the Instructions for
K Deductionsportfolio (2% floor) Schedule A, line 22
F Other AMT items Form 6251
L Deductionsportfolio (other) Schedule A, line 27
M Reforestation expense 16. Items affecting shareholder basis
deduction See the Shareholders Instructions A Tax-exempt interest income Form 1040, line 8b
N Preproductive period expenses See the Shareholders Instructions B Other tax-exempt income See the Shareholders Instructions
O Commercial revitalization C Nondeductible expenses See the Shareholders Instructions
deduction from rental real D Property distributions See the Shareholders Instructions
estate activities See Form 8582 Instructions E Repayment of loans from
P Domestic production activities shareholders See the Shareholders Instructions
information See Form 8903 Instructions
Q Qualified production activities 17. Other information
income Form 8903, line 7 A Investment income Form 4952, line 4a
R Employers W-2 wages Form 8903, line 13 B Investment expenses Form 4952, line 5
C Look-back interestcompleted
S Other deductions See the Shareholders Instructions
long-term contracts See Form 8697
13. Credits & credit recapture D Look-back interestincome forecast
}
A Low-income housing credit method See Form 8866
(section 42(j)(5)) Form 8586, line 4 E Dispositions of property with
B Low-income housing credit (other) Form 8586, line 4 section 179 deductions
C Qualified rehabilitation F Recapture of section 179
expenditures (rental real estate) Form 3468, line 1 deduction
D Qualified rehabilitation G Section 453(l)(3) information
expenditures (other than rental H Section 453A(c) information
real estate) Form 3468, line 1 I Section 1260(b) information
E Basis of energy property See the Shareholders Instructions J Interest allocable to production See the Shareholders Instructions
F Other rental real estate credits See the Shareholders Instructions expenditures
G Other rental credits See the Shareholders Instructions K CCF nonqualified withdrawal
H Undistributed capital gains credit Form 1040, line 70, check box a L Information needed to figure
I Credit for alcohol used as fuel Form 6478, line 4 depletionoil and gas
J Work opportunity credit Form 5884, line 3 M Amortization of reforestation
K Welfare-to-work credit Form 8861, line 3 costs
L Disabled access credit Form 8826, line 7 N Other information
STF FED4269F.2
Form 1065 U.S. Return of Partnership Income OMB No. 1545-0099

For calendar year 2005, or tax year beginning
u See separate instructions.
, 2005, ending , 20 .
2005
A Principal business activity Name of partnership D Employer identification number
Use the
IRS
B Principal product or service label. Number, street, and room or suite no. If a P.O. box, see the instructions. E Date business started
Other-
wise,
C Business code number print City or town, state, and ZIP code F Total assets (see the
or type. instructions)
$
G Check applicable boxes: (1) Initial return (2) Final return (3) Name change (4) Address change (5) Amended return
H Check accounting method: (1) Cash (2) Accrual (3) Other (specify) u
I Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax yearu
Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information.
1 a Gross receipts or sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

b Less returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b 1c 0.00
2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0.00

Income
3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00

4 Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . . . . 4
5 Net farm profit (loss) (attach Schedule F (Form 1040)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . . . . . . . . 6
7 Other income (loss) (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Total income (loss). Combine lines 3 through 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0.00
9 Salaries and wages (other than to partners) (less employment credits) . . . . . . . . . . . . . . . . 9

Deductions (see the instructions for limitations)
10 Guaranteed payments to partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

11 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16a Depreciation (if required, attach Form 4562) . . . . . . . . . . . . . . . 16a
b Less depreciation reported on Schedule A and elsewhere on return 16b 16c 0.00
17 Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . . 21 0.00
22 Ordinary business income (loss). Subtract line 21 from line 8 . . . . . . . . . . . . . . . . . . . . . . 22 0.00

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge
and belief, it is true, correct, and complete. Declaration of preparer (other than general partner or limited liability company member) is based on all
information of which preparer has any knowledge.
Here with the preparer shown below (see
u Signature of general partner or limited liability company member manager u Date

instructions)? Yes No
Preparers Date Preparers SSN or PTIN

Paid signature Check if
self-employed u
Preparers Firms name (or yours
Use Only
u EIN u
if self-employed),
address, and ZIP code Phone no.
For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. Form 1065 (2005)
ISA
STF FED3361F.1
Form 1065 (2005) Page 2
Schedule A Cost of Goods Sold (see the instructions)
1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Additional section 263A costs (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Other costs (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Total. Add lines 1 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0.00
7 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on page 1, line 2 . . . . . . . . . . . 8 0.00
9a Check all methods used for valuing closing inventory:
(i) Cost as described in Regulations section 1.471-3
(ii) Lower of cost or market as described in Regulations section 1.471-4
(iii) Other (specify method used and attach explanation) u
b Check this box if there was a writedown of subnormal goods as described in Regulations section 1.471-2(c) . . . . . . . u
c Check this box if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . . u
d Do the rules of section 263A (for property produced or acquired for resale) apply to the partnership? . . . . . Yes No
e Was there any change in determining quantities, cost, or valuations between opening and closing inventory? Yes No
If Yes, attach explanation.
Schedule B Other Information
1 What type of entity is filing this return? Check the applicable box: Yes No
a Domestic general partnership b Domestic limited partnership
c Domestic limited liability company d Domestic limited liability partnership
e Foreign partnership f Other u
2 Are any partners in this partnership also partnerships? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 During the partnerships tax year, did the partnership own any interest in another partnership or in any foreign
entity that was disregarded as an entity separate from its owner under Regulations sections 301.7701-2 and
301.7701-3? If yes, see instructions for required attachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Did the partnership file Form 8893, Election of Partnership Level Tax Treatment, or an election statement under
section 6231(a)(1)(B)(ii) for partnership-level tax treatment, that is in effect for this tax year? See Form 8893 for
more details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Does this partnership meet all three of the following requirements?
a The partnerships total receipts for the tax year were less than $250,000;
b The partnerships total assets at the end of the tax year were less than $600,000; and
c Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including
extensions) for the partnership return.
If Yes, the partnership is not required to complete Schedules L, M-1, and M-2; Item F on page 1 of Form 1065;
or Item N on Schedule K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 Does this partnership have any foreign partners? If Yes, the partnership may have to file Forms 8804, 8805 and
8813. See the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 Is this partnership a publicly traded partnership as defined in section 469(k)(2)? . . . . . . . . . . . . . . . . . . . . . . . .
8 Has this partnership filed, or is it required to file, a return under section 6111 to provide information on any reportable
transaction?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .
9 At any time during calendar year 2005, did the partnership have an interest in or a signature or other authority
over a financial account in a foreign country (such as a bank account, securities account, or other financial account)?
See the instructions for exceptions and filing requirements for Form TD F 90-22.1. If Yes, enter the name of the
foreign country. u
10 During the tax year, did the partnership receive a distribution from, or was it the grantor of, or transferor to, a
foreign trust? If Yes, the partnership may have to file Form 3520. See the instructions . . . . . . . . . . . . . . . . . . .
11 Was there a distribution of property or a transfer (for example, by sale or death) of a partnership interest during
the tax year? If Yes, you may elect to adjust the basis of the partnerships assets under section 754 by attaching
the statement described under Elections Made By the Partnership in the instructions . . . . . . . . . . . . . . . . . . . .
12 Enter the number of Forms 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, attached to
this return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u
Designation of Tax Matters Partner (see the instructions)
Enter below the general partner designated as the tax matters partner (TMP) for the tax year of this return:
Name of Identifying
designated TMP u number of TMP u
Address of
designated TMP u
Form 1065 (2005)
STF FED3361F.2
Form 1065 (2005) Page 3
Schedule K Partners Distributive Share Items Total amount
1 Ordinary business income (loss) (page 1, line 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0.00
2 Net rental real estate income (loss) (attach Form 8825). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3a Other gross rental income (loss) . . . . . . . . . . . . . . . . . . . . . . . . 3a
b Expenses from other rental activities (attach statement) . . . . . . . 3b
cOther net rental income (loss). Subtract line 3b from line 3a. . . . . . . . . . . . . . . . . . . . . . . . . 3c 0.00
Income (Loss)
4 Guaranteed payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Dividends: a Ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a
b Qualified dividends . . . . . . . . . . . . . . . . . . . . . . . 6b
7 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Net short-term capital gain (loss) (attach Schedule D (Form 1065)) . . . . . . . . . . . . . . . . . . . . 8
9a Net long-term capital gain (loss) (attach Schedule D (Form 1065)). . . . . . . . . . . . . . . . . . . . . 9a
b Collectibles (28%) gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . 9b
c Unrecaptured section 1250 gain (attach statement) . . . . . . . . . . . 9c
10 Net section 1231 gain (loss) (attach Form 4797) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Other income (loss) (see instructions) Type u 11
Employ- Deductions
12 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

13a Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 13a
b Investment interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13b
c Section 59(e)(2) expenditures: (1) Type u (2) Amount u 13c(2)
d Other deductions (see instructions) Type u 13d
14a Net earnings (loss) from self-employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14a
ment
Self-
b Gross farming or fishing income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14b

c Gross nonfarm income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c
15a Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15a
Recapture
Credits &
b Low-income housing credit (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15b

Credit
c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468) . . . . . . . . . . . . . . 15c
d Other rental real estate credits (see instructions) Type u 15d
e Other rental credits (see instructions) Type u 15e
f Other credits and credit recapture (see instructions) Type u 15f
16a Name of country or U.S. possession u
Foreign Transactions
b Gross income from all sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16b

c Gross income sourced at partner level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16c
Foreign gross income sourced at partnership level
d Passive u e Listed categories (attach statement) u f General limitation u 16f
Deductions allocated and apportioned at partner level
g Interest expense u h Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 16h
Deductions allocated and apportioned at partnership level to foreign source income
i Passive u j Listed categories (attach statement) u k General limitation u 16k
l Total foreign taxes (check one): u Paid Accrued ........................ 16l
m Reduction in taxes available for credit (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16m
n Other foreign tax information (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information Minimum Tax
17a Post-1986 depreciation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17a

(AMT) Items
Alternative
b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17b

c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17c
d Oil, gas, and geothermal propertiesgross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17d
e Oil, gas, and geothermal propertiesdeductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17e
f Other AMT items (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17f
18a Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18a
b Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18b
c Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18c
19a Distributions of cash and marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19a
b Distributions of other property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19b
20a Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20a
b Investment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20b
c Other items and amounts (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 1065 (2005)
STF FED3361F.3
Form 1065 (2005) Page 4
Analysis of Net Income (Loss)
1 Net income (loss). Combine Schedule K, lines 1 through 11. From the result, subtract the sum of
Schedule K, lines 12 through 13d, and 16l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0.00
2 Analysis by (ii) Individual (iii) Individual (v) Exempt
(i) Corporate (iv) Partnership (vi) Nominee/Other
partner type: (active) (passive) organization
a General partners
b Limited partners
Note: Schedules L, M-1, and M-2 are not required if Question 5 of Schedule B is answered Yes.
1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a Trade notes and accounts receivable . . . . . . . .
b Less allowance for bad debts . . . . . . . . . . . . .
3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 U.S. government obligations . . . . . . . . . . . . . .
5 Tax-exempt securities . . . . . . . . . . . . . . . . . . .
6 Other current assets (attach statement) . . . . . .
7 Mortgage and real estate loans . . . . . . . . . . . .
8 Other investments (attach statement) . . . . . . . .
9a Buildings and other depreciable assets . . . . . . .
b Less accumulated depreciation . . . . . . . . . . . .
10a Depletable assets . . . . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . . . . .
11 Land (net of any amortization) . . . . . . . . . . . . .
12a Intangible assets (amortizable only) . . . . . . . . .
b Less accumulated amortization . . . . . . . . . . . .
13 Other assets (attach statement) . . . . . . . . . . . .
14 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Capital
15 Accounts payable . . . . . . . . . . . . . . . . . . . . . .
17 Other current liabilities (attach statement) . . . . .
18 All nonrecourse loans . . . . . . . . . . . . . . . . . . .
20 Other liabilities (attach statement) . . . . . . . . . .
21 Partners capital accounts . . . . . . . . . . . . . . .
22 Total liabilities and capital . . . . . . . . . . . . . . . . . .
Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return
1 Net income (loss) per books . . . . . . . . 6 Income recorded on books this year not included
2 Income included on Schedule K, lines 1, 2, 3c, on Schedule K, lines 1 through 11 (itemize):
5, 6a, 7, 8, 9a, 10, and 11, not recorded on a Tax-exempt interest $
books this year (itemize):
3 Guaranteed payments (other than health 7 Deductions included on Schedule K, lines 1
insurance) . . . . . . . . . . . . . . . . . . . . . . . through 13d, and 16l, not charged against
4 Expenses recorded on books this year not book income this year (itemize):
included on Schedule K, lines 1 through a Depreciation $
13d, and 16l (itemize):
a Depreciation $
b Travel and entertainment $ 8 Add lines 6 and 7 . . . . . . . . . . . . . . . . . . . . .
9 Income (loss) (Analysis of Net Income (Loss),
5 Add lines 1 through 4 . . . . . . . . . . . . . . line 1). Subtract line 8 from line 5 . . . . . . . . . .
Schedule M-2 Analysis of Partners Capital Accounts
1 Balance at beginning of year . . . . . . . 6 Distributions: a Cash . . . . . . . . . . . . . . . .
2 Capital contributed: a Cash . . . . . . . . . b Property . . . . . . . . . . . . . .
b Property . . . . . . . 7 Other decreases (itemize):
3 Net income (loss) per books . . . . . . . .
4 Other increases (itemize):
8 Add lines 6 and 7 . . . . . . . . . . . . . . . . . . . .
5 Add lines 1 through 4 . . . . . . . . . . . . . . 9 Balance at end of year. Subtract line 8 from line 5
Form 1065 (2005)
STF FED3361F.4
651105
Final K-1 Amended K-1 OMB No. 1545-0099
Schedule K-1
(Form 1065) 2005 Part III Partners Share of Current Year Income,
Deductions, Credits, and Other Items
Department of the Treasury 1 Ordinary business income (loss) 15 Credits & credit recapture
For calendar year 2005, or tax
year beginning , 2005
2 Net rental real estate income (loss)
ending , 20
Partners Share of Income, Deductions,
3 Other net rental income (loss) 16 Foreign transactions
Credits, etc. u See back of form and separate instructions.
Part I Information About the Partnership 4 Guaranteed payments

A Partnerships employer identification number
5 Interest income
B Partnerships name, address, city, state, and ZIP code
6a Ordinary dividends
6b Qualified dividends
7 Royalties
C IRS Center where partnership filed return
8 Net short-term capital gain (loss)
D Check if this is a publicly traded partnership (PTP)

9a Net long-term capital gain (loss) 17 Alternative minimum tax (AMT) items
E Tax shelter registration number, if any
F Check if Form 8271 is attached
9b Collectibles (28%) gain (loss)
Part II Information About the Partner
G Partners identifying number 9c Unrecaptured section 1250 gain
H Partners name, address, city, state, and ZIP code 10 Net section 1231 gain (loss) 18 Tax-exempt income and
nondeductible expenses
11 Other income (loss)
I General partner or LLC Limited partner or other LLC

member-manager member 19 Distributions
12 Section 179 deduction
J Domestic partner Foreign partner
13 Other deductions
K What type of entity is this partner?
20 Other information
L Partners share of profit, loss, and capital:
Beginning Ending
Profit % %
Loss % %
Capital % %
14 Self-employment earnings (loss)
M Partners share of liabilities at year end:

Nonrecourse . . . . . . . . . . . . . . . . . . $
Qualified nonrecourse financing . . . . . $
Recourse . . . . . . . . . . . . . . . . . . . . . $ *See attached statement for additional information.
N Partners capital account analysis:

Beginning capital account . . . . . . . . . $
For IRS Use Only
Capital contributed during the year . . $

Current year increase (decrease) . . . . $
Withdrawals & distributions . . . . . . . . $ ( )
Ending capital account . . . . . . . . . . . $ 0
Tax basis GAAP Section 704(b) book
Other (explain)
For Privacy Act and Paperwork Reduction Act Notice, see Instructions for Form 1065. Schedule K-1 (Form 1065) 2005
ISA
STF FED3405F.1
Schedule K-1 (Form 1065) 2005 Page 2
This list identifies the codes used on Schedule K-1 for all partners and provides summarized reporting information for partnerswho file
Form 1040. For detailed reporting and filing information, see the separate Partners Instructions for Schedule K-1 and theinstructions
for your income tax return.
1. Ordinary business income (loss). You must first determine whether the Code Enter on
income (loss) is passive or nonpassive. Then enter on your return as J Work opportunity credit Form 5884, line 3
follows: K Welfare-to-work credit Form 8861, line 3
Enter on L Disabled access credit Form 8826, line 7
Passive loss See the Partners Instructions M Empowerment zone and renewal
Passive income Schedule E, line 28, column (g) community employment credit Form 8844, line 3
Nonpassive loss Schedule E, line 28, column (h) N Credit for increasing research
activities Form 6765, line 42
Nonpassive income Schedule E, line 28, column (j)
O New markets credit Form 8874, line 2
2. Net rental real estate income (loss) See the Partners Instructions P Credit for employer social security
3. Other net rental income (loss) and Medicare taxes Form 8846, line 5
Net income Schedule E, line 28, column (g) Q Backup withholding Form 1040, line 64
Net loss See the Partners Instructions R Recapture of low-income housing
4. Guaranteed payments Schedule E, line 28, column (j) credit (section 42(j)(5)) Form 8611, line 8
S Recapture of low-income housing
5. Interest income Form 1040, line 8a credit (other) Form 8611, line 8
6a. Ordinary dividends Form 1040, line 9a T Recapture of investment credit See Form 4255
6b. Qualified dividends Form 1040, line 9b U Other credits See the Partners Instructions
7. Royalties Schedule E, line 4 V Recapture of other credits See the Partners Instructions
8. Net short-term capital gain (loss) Schedule D, line 5, column (f) 16. Foreign transactions
A Name of country or U.S.
9a. Net long-term capital gain (loss) Schedule D, line 12, column (f) possession Form 1116, Part I
9b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4 B Gross income from all sources Form 1116, Part I
(Schedule D Instructions)
C Gross income sourced at partner
9c. Unrecaptured section 1250 gain See the Partners Instructions level Form 1116, Part I
10. Net section 1231 gain (loss) See the Partners Instructions Foreign gross income sourced at partnership level
11. Other income (loss) D Passive Form 1116, Part l
Code E Listed categories Form 1116, Part I
A Other portfolio income (loss) See the Partners Instructions F General limitation Form 1116, Part I
B Involuntary conversions See the Partners Instructions Deductions allocated and apportioned at partner level
C Sec. 1256 contracts & straddles Form 6781, line 1 G Interest expense Form 1116, Part I
D Mining exploration costs recapture See Pub. 535 H Other Form 1116, Part I
E Cancellation of debt Form 1040, line 21 or Form 982 Deductions allocated and apportioned at partnership level
F Other income (loss) See the Partners Instructions to foreign source income
12. Section 179 deduction See the Partners Instructions I Passive Form 1116, Part I
}
13. Other deductions J Listed categories Form 1116, Part I
A Cash contributions (50%) K General limitation Form 1116, Part I
B Cash contributions (30%) Other information
C Noncash contributions (50%) L Total foreign taxes paid Form 1116, Part II
D Noncash contributions (30%) See the Partners M Total foreign taxes accrued Form 1116, Part II
E Capital gain property to a 50% Instructions N Reduction in taxes available for
organization (30%) credit Form 1116, line 12
F Capital gain property (20%) O Foreign trading gross receipts Form 8873
G Cash contributions (100%) P Extraterritorial income exclusion Form 8873
H Investment interest expense Form 4952, line 1 Q Other foreign transactions See the Partners Instructions
I Deductionsroyalty income Schedule E, line 18
17. Alternative minimum tax (AMT) items
J Section 59(e)(2) expenditures See Partners Instructions
}
A Post-1986 depreciation adjustment
K Deductionsportfolio (2% floor) Schedule A, line 22
B Adjusted gain or loss See the Partners
L Deductionsportfolio (other) Schedule A, line 27
C Depletion (other than oil & gas) Instructions and
M Amounts paid for medical insurance Schedule A, line 1 or Form 1040,
line 29 D Oil, gas, & geothermalgross income the Instructions for
N Educational assistance benefits See the Partners Instructions E Oil, gas, & geothermaldeductions Form 6251
O Dependent care benefits Form 2441, line 12 F Other AMT items
P Preproductive period expenses See the Partners Instructions 18. Tax-exempt income and nondeductible expenses
Q Commercial revitalization deduction A Tax-exempt interest income Form 1040, line 8b
from rental real estate activities See Form 8582 Instructions B Other tax-exempt income See the Partners Instructions
R Pensions and IRAs See the Partners Instructions C Nondeductible expenses See the Partners Instructions
S Reforestation expense deduction See the Partners Instructions 19. Distributions
T Domestic production activities A Cash and marketable securities See the Partners Instructions
information See Form 8903 instructions B Other property See the Partners Instructions
U Qualified production activities income Form 8903, line 7
V Employers W-2 wages Form 8903, line 13 20. Other information
W Other deductions See the Partners Instructions A Investment income Form 4952, line 4a
B Investment expenses Form 4952, line 5
14. Self-employment earnings (loss) C Fuel tax credit information Form 4136
Note. If you have a section 179 deduction or any partner-level deductions, see D Look-back interestcompleted
the Partners Instructions before completing Schedule SE. long-term contracts Form 8697
A Net earnings (loss) from E Look-back interestincome forecast
}
self-employment Schedule SE, Section A or B method Form 8866
B Gross farming or fishing income See the Partners Instructions F Dispositions of property with
C Gross non-farm income See the Partners Instructions section 179 deductions
15. Credits & credit recapture G Recapture of section 179 deduction
A Low-income housing credit H Special basis adjustments
(section 42(j)(5)) Form 8586, line 4 I Section 453(l)(3) information
B Low-income housing credit (other) Form 8586, line 4 J Section 453A(c) information
C Qualified rehabilitation expenditures K Section 1260(b) information
See the Partners
(rental real estate) Form 3468, line 1 L Interest allocable to production
expenditures Instructions
D Qualified rehabilitation expenditures
(other than rental real estate) Form 3468, line 1 M CCF nonqualified withdrawals
E Basis of energy property See the Partners Instructions N Information needed to figure
F Other rental real estate credits See the Partners Instructions depletionoil and gas
G Other rental credits See the Partners Instructions O Amortization of reforestation costs
H Undistributed capital gains credit Form 1040, line 70; check box a P Unrelated business taxable income
I Credit for alcohol used as fuel See the Partners Instructions Q Other information
STF FED3405F.2
Department of the Treasury Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What New Business Owners Need To Know . . . . . 2
Publication 583 Forms of Business . . . . . . . . . . . . . . . . . . . . . . . . . 2
(Rev. December 2003)
Identification Numbers . . . . . . . . . . . . . . . . . . . . . . 3
Employer Identification Number (EIN) . . . . . . . . . 3
Starting a Payees Identification Number . . . . . . . . . . . . . .

Tax Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
4
Business and Accounting Method . . . . . . . . . . . . . . . . . . . . . . . .

Business Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
5
Keeping Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Self-Employment Tax . . . . . . . . . . . . . . . . . . . . .
5
5
Records
Employment Taxes . . . . . . . . . . . . . . . . . . . . . . . 7
Excise Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Depositing Taxes . . . . . . . . . . . . . . . . . . . . . . . . 8
Information Returns . . . . . . . . . . . . . . . . . . . . . . . . 8
Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Business Expenses . . . . . . . . . . . . . . . . . . . . . . . . 9
Business Start-Up Costs . . . . . . . . . . . . . . . . . . . 10
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Business Use of Your Home . . . . . . . . . . . . . . . . 10
Car and Truck Expenses . . . . . . . . . . . . . . . . . . 11
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Why Keep Records? . . . . . . . . . . . . . . . . . . . . . . 11
Kinds of Records To Keep . . . . . . . . . . . . . . . . . 12
How Long To Keep Records . . . . . . . . . . . . . . . . 15
Sample Record System . . . . . . . . . . . . . . . . . . . 16
How To Get More Information . . . . . . . . . . . . . . . . 24

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Introduction
This publication provides basic federal tax information for
people who are starting a business. It also provides infor-
mation on keeping records and illustrates a recordkeep-
ing system.
Throughout this publication we refer to other IRS publi-
cations and forms where you will find more information. In
addition, you may want to contact other government agen-
Get forms and other information cies, such as the Small Business Administration (SBA).
faster and easier by: See page 24 to find out how to get more information.
Internet www.irs.gov or FTP ftp.irs.gov Comments and suggestions. We welcome your com-
FAX 7033689694 (from your fax machine) ments about this publication and your suggestions for
future editions.
You can email us at *taxform@irs.gov. Please put
Publications Comment on the subject line.
www.irs.gov/efile
STF PUB583F.1
You can write to us at the following address: How will I manage my business on a day-to-day
basis?
Internal Revenue Service How will I recruit employees?
Business Forms and Publications
SE:W:CAR:MP:T:B The Small Business Administration (SBA) is a federal
1111 Constitution Ave. NW agency that can help you answer these types of questions.
Washington, DC 20224 For information on how to contact the SBA, see page 26.
We respond to many letters by telephone. Therefore, it

would be helpful if you would include your daytime phone Forms of Business
number, including the area code, in your correspondence.
The most common forms of business are the sole proprie-
torship, partnership, and corporation. When beginning a
business, you must decide which form of business to use.
What New Business Owners Legal and tax considerations enter into this decision. Only
Need To Know tax considerations are discussed in this publication.
Your form of business determines which income
As a new business owner, you need to know your federal TIP tax return form you have to file. See Table 2 on
tax responsibilities. Table 1, below, can help you learn page 6 to find out which form you have to file.
what those responsibilities are. Ask yourself each question
listed in the table, then see the related discussion to find
the answer. Sole proprietorships. A sole proprietorship is an unin-
In addition to knowing about federal taxes, you need to corporated business that is owned by one individual. It is
make some basic business decisions. Ask yourself: the simplest form of business organization to start and
maintain. The business has no existence apart from you,
What are my financial resources? the owner. Its liabilities are your personal liabilities. You
What products and services will I sell? undertake the risks of the business for all assets owned,
whether or not used in the business. You include the
How will I market my products and services?
income and expenses of the business on your personal tax
How will I develop a strategic business plan? return.
Table 1. What New Business Owners Need To Know About Federal Taxes
(Note: This table is intended to help you, as a new business owner, learn what you need to know about
your federal tax responsibilities. To use it, ask yourself each question in the left column, then see the related
discussion on the page shown in the right column.)
What Must I Know? Where To Find the Answer
Which form of business will I use? See Forms of Business above.
Will I need an employer identification number (EIN)? See Identification Numbers on page 3.
Do I have to start my tax year in January, or may I start it See Tax Year on page 4.
in any other month?
What method can I use to account for my income and See Accounting Method on page 5.
expenses?
What kinds of federal taxes will I have to pay? How See Business Taxes on page 5.
should I pay my taxes?
What must I do if I have employees? See Employment Taxes on page 7.
Which forms must I file? See Table 2 on page 6 and Information Returns on
page 8.
Are there penalties if I do not pay my taxes or file my See Penalties on page 9.
returns?
What business expenses can I deduct on my federal See Business Expenses on page 9.
income tax return?
What records must I keep? How long must I keep them? See Recordkeeping on page 11.
Page 2
STF PUB583F.2
More information. For more information on sole propri-
etorships, see Publication 334, Tax Guide for Small Busi- Identification Numbers
ness. If you are a farmer, see Publication 225, Farmers
Tax Guide. You must have a taxpayer identification number so the IRS
can process your returns. The two most common kinds of
Partnerships. A partnership is the relationship existing taxpayer identification numbers are the social security
number (SSN) and the employer identification number
between two or more persons who join to carry on a trade
(EIN).
or business. Each person contributes money, property,
labor, or skill, and expects to share in the profits and losses An SSN is issued to individuals by the Social Secur-
of the business. ity Administration (SSA) and is in the following for-
A partnership must file an annual information return to mat: 000000000.
report the income, deductions, gains, losses, etc., from its An EIN is issued to individuals (sole proprietors),
operations, but it does not pay income tax. Instead, it partnerships, corporations, and other entities by the
passes through any profits or losses to its partners. Each IRS and is in the following format: 000000000.
partner includes his or her share of the partnerships items
on his or her tax return. You must include your taxpayer identification number
More information. For more information on partner- (SSN or EIN) on all returns and other documents you send
to the IRS. You must also furnish your number to other
ships, see Publication 541, Partnerships.
persons who use your identification number on any returns
or documents they send to the IRS. This includes returns
Corporations. In forming a corporation, prospective or documents filed to report the following information.
shareholders exchange money, property, or both, for the
corporations capital stock. A corporation generally takes 1) Interest, dividends, royalties, etc., paid to you.
the same deductions as a sole proprietorship to figure its
2) Any amount paid to you as a dependent care pro-
taxable income. A corporation can also take special deduc- vider.
tions.
3) Certain other amounts paid to you that total $600 or
The profit of a corporation is taxed to the corporation
more for the year.
when earned, and then is taxed to the shareholders when
distributed as dividends. However, shareholders cannot If you do not furnish your identification number as re-
deduct any loss of the corporation. quired, you may be subject to penalties. See Penalties,
later.
More information. For more information on corpora-
tions, see Publication 542, Corporations.
Employer Identification Number (EIN)
S corporations. An eligible domestic corporation can EINs are used to identify the tax accounts of employers,
avoid double taxation (once to the corporation and again to certain sole proprietors, corporations, partnerships, es-
the shareholders) by electing to be treated as an S corpo- tates, trusts, and other entities.
ration. Generally, an S corporation is exempt from federal If you dont already have an EIN, you need to get one if
income tax other than tax on certain capital gains and you:
passive income. On their tax returns, the S corporations
shareholders include their share of the corporations sepa- 1) Have employees,
rately stated items of income, deduction, loss, and credit, 2) Have a qualified retirement plan,
and their share of nonseparately stated income or loss.
3) Operate your business as a corporation or partner-
More information. For more information on S corpora- ship, or
tions, see the instructions for Form 2553, Election by a
4) File returns for:
Small Business Corporation, and Form 1120S, U.S. In-
come Tax Return for an S Corporation. a) Employment taxes, or
b) Excise taxes.
Limited liability company. A limited liability company
(LLC) is an entity formed under state law by filing articles of
organization as an LLC. None of the members of an LLC Applying for an EIN. You may apply for an EIN:
are personally liable for its debts. An LLC may be classified
for federal income tax purposes as either a partnership, a OnlineClick on the EIN link at www.irs.gov/busi-
corporation, or an entity disregarded as an entity separate nesses/small. The EIN is issued immediately once
from its owner by applying the rules in regulations section the application information is validated.
301.77013. For more information, see the instructions for By telephone at 18008294933 from 7:30 a.m.
Form 8832, Entity Classification Election. to 5:30 p.m. in the applicants local time zone.
Page 3
STF PUB583F.3
By mailing or faxing Form SS4, Application for If the payee does not provide you with an identifi-
Employer Identification Number. !
CAUTION
cation number, you may have to withhold part of
the payments as backup withholding. For infor-
When to apply. You should apply for an EIN early mation on backup withholding, see the Form W9 instruc-
enough to receive the number by the time you must file a tions and the General Instructions for Forms 1099, 1098,
return or statement or make a tax deposit. If you apply by 5498, and W2G.
mail, file Form SS4 at least 4 to 5 weeks before you need
an EIN. If you apply by telephone or through the IRS
website, you can get an EIN immediately. If you apply by
fax, you can get an EIN within 4 business days.
Tax Year
If you do not receive your EIN by the time a return is due, You must figure your taxable income and file an income tax
file your return anyway. Write Applied for and the date return based on an annual accounting period called a tax
you applied for the number in the space for the EIN. Do not year. A tax year is usually 12 consecutive months. There
use your social security number as a substitute for an EIN are two kinds of tax years.
on your tax returns.
1) Calendar tax year. A calendar tax year is 12 con-
More than one EIN. You should have only one EIN. If you secutive months beginning January 1 and ending
have more than one EIN and are not sure which to use, December 31.
contact the Internal Revenue Service Center where you file 2) Fiscal tax year. A fiscal tax year is 12 consecutive
your return. Give the numbers you have, the name and months ending on the last day of any month except
address to which each was assigned, and the address of December. A 52-53-week tax year is a fiscal tax year
your main place of business. The IRS will tell you which that varies from 52 to 53 weeks but does not have to
number to use. end on the last day of a month.
If you file your first tax return using the calendar tax year
More information. For more information about EINs, see
and you later begin business as a sole proprietor, become
Publication 1635, Understanding Your EIN.
a partner in a partnership, or become a shareholder in an S
corporation, you must continue to use the calendar year
Payees Identification Number unless you get IRS approval to change it or are otherwise
allowed to change it without IRS approval.
In the operation of a business, you will probably make You must use a calendar tax year if:
certain payments you must report on information returns
(discussed later under Information Returns). The forms You keep no books.
used to report these payments must include the payees You have no annual accounting period.
identification number.
Your present tax year does not qualify as a fiscal
Employee. If you have employees, you must get an SSN year.
from each of them. Record the name and SSN of each You are required to use a calendar year by a provi-
employee exactly as they are shown on the employees sion of the Internal Revenue Code or the Income
social security card. If the employees name is not correct Tax Regulations.
as shown on the card, the employee should request a new
card from the SSA. This may occur, for example, if the For more information, see Publication 538, Accounting
employees name has changed due to marriage or divorce. Periods and Methods.
If your employee does not have an SSN, he or she
First-time filer. If you have never filed an income tax
should file Form SS5, Application for a Social Security
return, you adopt either a calendar tax year or a fiscal tax
Card, with the SSA. This form is available at SSA offices or
year. You adopt a tax year by filing your first income tax
by calling 18007721213. It is also available from the
return using that tax year. You have not adopted a tax year
SSA website at www.ssa.gov.
if you merely did any of the following.
Other payee. If you make payments to someone who is Filed an application for an extension of time to file an
not your employee and you must report the payments on income tax return.
an information return, get that persons SSN. If you make Filed an application for an employer identification
reportable payments to an organization, such as a corpo- number.
ration or partnership, you must get its EIN.
To get the payees SSN or EIN, use Form W9, Paid estimated taxes for that tax year.
Request for Taxpayer Identification Number and Certifica-
tion. This form is available from IRS offices or by calling Changing your tax year. Once you have adopted your
18008293676. It is also available from the IRS web- tax year, you may have to get IRS approval to change it. To
site at www.irs.gov. get approval, you must file Form 1128, Application To
Page 4
STF PUB583F.4
Adopt, Change, or Retain a Tax Year. You may have to
pay a fee. For more information, see Publication 538. Business Taxes
The form of business you operate determines what taxes
Accounting Method you must pay and how you pay them. The following are the
four general kinds of business taxes.
An accounting method is a set of rules used to determine Income tax.
when and how income and expenses are reported. You
choose an accounting method for your business when you Self-employment tax.
file your first income tax return. There are two basic ac- Employment taxes.
counting methods.
Excise taxes.
1) Cash method. Under the cash method, you report
income in the tax year you receive it. You usually See Table 2 on page 6 for the forms you file to report
deduct or capitalize expenses in the tax year you pay these taxes.
them. You may want to get Publication 509. It has tax
2) Accrual method. Under an accrual method, you TIP calendars that tell you when to file returns and
generally report income in the tax year you earn it, make tax payments.
even though you may receive payment in a later
year. You deduct or capitalize expenses in the tax
year you incur them, whether or not you pay them
Income Tax
that year. All businesses except partnerships must file an annual
For other methods, see Publication 538. income tax return. Partnerships file an information return.
If you need inventories to show income correctly, you Which form you use depends on how your business is
must generally use an accrual method of accounting for organized. See Table 2 on page 6 to find out which return
purchases and sales. Inventories include goods held for you have to file.
sale in the normal course of business. They also include The federal income tax is a pay-as-you-go tax. You
raw materials and supplies that will physically become a must pay the tax as you earn or receive income during the
part of merchandise intended for sale. Inventories are year. An employee usually has income tax withheld from
explained in Publication 538. his or her pay. If you do not pay your tax through withhold-
ing, or do not pay enough tax that way, you might have to
Certain small business taxpayers can use the pay estimated tax. If you are not required to make esti-
TIP cash method of accounting and can also account mated tax payments, you may pay any tax due when you
for inventoriable items as materials and supplies file your return.
that are not incidental. For more information, see Publica-
tion 538. Estimated tax. Generally, you must pay taxes on income,
You must use the same accounting method to figure including self-employment tax (discussed next), by making
your taxable income and to keep your books. Also, you regular payments of estimated tax during the year.
must use an accounting method that clearly shows your Sole proprietors, partners, and S corporation share-
income. In general, any accounting method that consist- holders. You generally have to make estimated tax pay-
ently uses accounting principles suitable for your trade or
ments if you expect to owe tax of $1,000 or more when you
business clearly shows income. An accounting method file your return. Use Form 1040ES, Estimated Tax for
clearly shows income only if it treats all items of gross Individuals, to figure and pay your estimated tax. For more
income and expense the same from year to year. information, see Publication 505, Tax Withholding and
Estimated Tax.
More than one business. When you own more than one
business, you can use a different accounting method for Corporations. You generally have to make estimated
each business if the method you use for each clearly tax payments for your corporation if you expect it to owe
shows your income. You must keep a complete and sepa- tax of $500 or more when you file its return. Use Form
rate set of books and records for each business. 1120W, Estimated Tax for Corporations, to figure the
estimated tax. You must deposit the payments as ex-
Changing your method of accounting. Once you have plained on page 8 under Depositing Taxes. For more
set up your accounting method, you must generally get information, see Publication 542.
IRS approval before you can change to another method. A
change in accounting method not only includes a change Self-Employment Tax
in your overall system of accounting, but also a change in
the treatment of any material item. For examples of Self-employment tax (SE tax) is a social security and
changes that require approval and information on how to Medicare tax primarily for individuals who work for them-
get approval for the change, see Publication 538. selves. Your payments of SE tax contribute to your cover-
Page 5
STF PUB583F.5
Table 2. Which Forms Must I File?
IF you are a... THEN you may be liable for... Use Form...
Sole proprietor Income tax 1040 and Schedule C1 or CEZ
(Schedule F1 for farm business)
Self-employment tax 1040 and Schedule SE
Estimated tax 1040ES
Employment taxes:
Social security and Medicare 941 (943 for farm employees)
taxes and income tax
withholding
Federal unemployment (FUTA) 940 or 940EZ
tax
Depositing employment taxes 8109 2
Excise taxes See Excise Taxes
Partnership Annual return of income 1065
Employment taxes Same as sole proprietor
Partner in a partnership (individual) Income tax 1040 and Schedule E3
Self-employment tax 1040 and Schedule SE
Corporation or S corporation Income tax 1120 or 1120A (corporation)3
1120S (S corporation)3
Estimated tax 1120W (corporation only) and
81092
Employment taxes Same as sole proprietor
S corporation shareholder Income tax 1040 and Schedule E3
1
File a separate schedule for each business.
2 Do not use if you deposit taxes electronically.
3
Various other schedules may be needed.
age under the social security system. Social security You can deduct one-half of your SE tax as an
coverage provides you with retirement benefits, disability TIP adjustment to income on your Form 1040.
benefits, survivor benefits, and hospital insurance (Medi-
care) benefits.
You must pay SE tax and file Schedule SE (Form 1040)
if either of the following applies. The Social Security Administration (SSA) time limit for
posting self-employment income. Generally, the SSA
1) Your net earnings from self-employment were $400 will give you credit only for self-employment income re-
or more. ported on a tax return filed within 3 years, 3 months, and 15
days after the tax year you earned the income. If you file
2) You had church employee income of $108.28 or
your tax return or report a change in your self-employment
more.
income after this time limit, the SSA may change its rec-
Use Schedule SE (Form 1040) to figure your SE tax. For ords, but only to remove or reduce the amount. The SSA
more information, see Publication 533, Self-Employment will not change its records to increase your self-employ-
Tax. ment income.
Page 6
STF PUB583F.6
Employment Taxes who lose their jobs. You report and pay FUTA tax sepa-
rately from social security and Medicare taxes and with-
This section briefly discusses the employment taxes you held income tax. You pay FUTA tax only from your own
must pay, the forms you must file to report them, and other funds. Employees do not pay this tax or have it withheld
forms that must be filed when you have employees. from their pay.
Employment taxes include the following.
Which form do I file? Report federal unemployment tax
Social security and Medicare taxes. on Form 940, Employers Annual Federal Unemployment
(FUTA) Tax Return. Or, if you qualify, you can use the
Federal income tax withholding. simpler Form 940EZ instead. See Publication 15 to find
Federal unemployment (FUTA) tax. out if you can use this form.
If you have employees, you will need to get Publication Hiring Employees
15, Circular E, Employers Tax Guide. If you have agricul-
tural employees, get Publication 51, Circular A, Agricul- Have the employees you hire fill out Form I9 and Form
tural Employers Tax Guide. These publications explain W4. If your employees qualify for and want to receive
your tax responsibilities as an employer. advanced earned income credit payments, they must give
you a completed Form W5.
If you are not sure whether the people working for you
are your employees, see Publication 15A, Employers
Supplemental Tax Guide. That publication has information Form I9. You must verify that each new employee is
to help you determine whether an individual is an em- legally eligible to work in the United States. Both you and
ployee or an independent contractor. If you classify an the employee must complete the U.S. Citizenship and
employee as an independent contractor, you can be held Immigration Services (USCIS) Form I9, Employment Eli-
liable for employment taxes for that worker plus a penalty. gibility Verification. You can get the form from USCIS
An independent contractor is someone who is self-em- offices or from the USCIS website at http://uscis.gov. Call
ployed. Generally, you do not have to withhold or pay any the USCIS at 18003755283 for more information
taxes on payments to an independent contractor. about your responsibilities.
Form W4. Each employee must fill out Form W4,

Federal Income, Social Security, and Employees Withholding Allowance Certificate. You will
Medicare Taxes use the filing status and withholding allowances shown on
this form to figure the amount of income tax to withhold
You generally must withhold federal income tax from your
from your employees wages.
employees wages. To figure how much federal income tax
In certain circumstances, you may be required to send a
to withhold from each wage payment, use the employees
copy of an employees Form W4 to the IRS. If you have
Form W4 (discussed later under Hiring Employees) and
an employee who submits a Form W4 claiming more
the methods described in Publication 15.
than 10 withholding allowances, or claiming an exemption
Social security and Medicare taxes pay for benefits that from withholding when the employees wages are normally
workers and their families receive under the Federal Insur- more that $200 a week, see Publication 15.
ance Contributions Act (FICA). Social security tax pays for
benefits under the old-age, survivors, and disability insur- Form W5. An eligible employee who has a qualifying
ance part of FICA. Medicare tax pays for benefits under the child is entitled to receive advance earned income credit
hospital insurance part of FICA. You withhold part of these (EIC) payments with his or her pay during the year. To get
taxes from your employees wages and you pay a match- these payments, the employee must give you a properly
ing amount yourself. To find out how much social security completed Form W5, Earned Income Credit Advance
and Medicare tax to withhold and to pay, see Publication Payment Certificate. You are required to make advance
15. EIC payments to employees who give you a completed
and signed Form W5. For more information, see Publica-
Which form do I file? Report these taxes on Form 941, tion 15.
Employers Quarterly Federal Tax Return. (Farm employ-
ers use Form 943, Employers Annual Federal Tax Return
for Agricultural Employees.) Form W2 Wage Reporting
After the calendar year is over, you must furnish copies of
Federal Unemployment (FUTA) Tax Form W2, Wage and Tax Statement, to each employee
to whom you paid wages during the year. You must also
The federal unemployment tax is part of the federal and send copies to the Social Security Administration. See
state program under the Federal Unemployment Tax Act Information Returns, later, for more information on Form
(FUTA) that pays unemployment compensation to workers W2.
Page 7
STF PUB583F.7
Excise Taxes will receive an EFTPS PIN package that contains instruc-
tions for activating its EFTPS enrollment.
This section describes the excise taxes you may have to If a business is not required to use EFTPS, it can make
pay and the forms you have to file if you do any of the deposits with an authorized financial institution. These
following. deposits must be accompanied by a deposit coupon. See
Deposit coupons, later.
Manufacture or sell certain products. Taxpayers not required to make deposits by EFTPS
Operate certain kinds of businesses. may enroll in the system, which will allow tax deposits
without coupons, paper checks, or visits to an authorized
Use various kinds of equipment, facilities, or prod- depositary. For more information, see Publication 15.
ucts.
Receive payment for certain services. Making deposits with coupons. Mail or deliver deposits
with completed deposit coupons to an authorized finan-
For more information on excise taxes, see Publication 510. cial institution unless you make the deposits electronically,
as discussed earlier.
Form 720. The federal excise taxes reported on Form Generally, a mailed deposit will be considered timely if
720, Quarterly Federal Excise Tax Return, consist of sev- the taxpayer establishes that it was mailed in the United
eral broad categories of taxes, including the following.
States at least 2 days before the due date. You may be
Environmental taxes. charged a penalty for not making deposits when due,
unless you have reasonable cause. See Penalties, later.
Communications and air transportation taxes.
To help ensure proper crediting of your account,
Fuel taxes.
TIP include the following on your check or money
Tax on the first retail sale of heavy trucks, trailers, order.
and tractors. Your EIN.
Manufacturers taxes on the sale or use of a variety Type of tax.
of different articles.
Tax period for the payment.
Form 2290. There is a federal excise tax on certain trucks,
truck tractors, and buses used on public highways. The tax
applies to vehicles having a taxable gross weight of 55,000 Deposit coupons. Use Form 8109, Federal Tax De-
pounds or more. Report the tax on Form 2290, Heavy posit Coupon, to deposit taxes. On each coupon, you must
Highway Vehicle Use Tax Return. For more information, show the deposit amount, the type of tax, the period for
see the instructions for Form 2290. which you are making a deposit, and your telephone num-
ber. Use a separate coupon for each tax and period. You
Form 730. If you are in the business of accepting wagers must include a coupon with each deposit you make.
or conducting a wagering pool or lottery, you may be liable
If you apply for a new EIN and have a federal tax
for the federal excise tax on wagering. Use Form 730, obligation, you will be mailed one deposit coupon. If you
Monthly Tax Return for Wagers, to figure the tax on the want to order a coupon book, call 18008294933. You
wagers you receive. should receive the coupon book within 4 to 6 weeks of
ordering.
Form 11C. Use Form 11C, Occupational Tax and
If you have a deposit due and there is not enough time
Registration Return for Wagering, to register for any wa-
to obtain a coupon book, you can get a blank coupon
gering activity and to pay the federal occupational tax on
wagering. (Form 8109B) by calling 18008294933.
If you have not received your EIN and must make a
deposit, mail your payment with an explanation to the
Depositing Taxes Internal Revenue Service Center where you file your re-
turn. Make your check or money order payable to the
You generally have to deposit employment taxes, certain
United States Treasury. On the payment, write your name
excise taxes, corporate income tax, and S corporation
(exactly as shown on Form SS4), your address, the kind
taxes before you file your return.
of tax, the period covered, and the date you applied for an
Electronic deposit of taxes. Generally, taxpayers whose EIN. Do not use Form 8109B in this situation.
total deposits of social security and Medicare taxes and
withheld income tax during previous years exceeded cer-
tain amounts are required to deposit taxes through the Information Returns
Electronic Federal Tax Payment System (EFTPS).
Starting in January 2004, any business that has a fed- If you make or receive payments in your business, you
eral tax obligation and requests a new EIN will automati- may have to report them to the IRS on information returns.
cally be enrolled in EFTPS. Through the mail, the business The IRS compares the payments shown on the information
Page 8
STF PUB583F.8
returns with each persons income tax return to see if the your tax return instructions for more information about this
payments were included in income. You must give a copy penalty.
of each information return you are required to file to the
recipient or payer. In addition to the forms described be- Failure to pay tax. If you do not pay your taxes by the due
low, you may have to use other returns to report certain date, you will have to pay a penalty for each month, or part
kinds of payments or transactions. For more details on of a month, that your taxes are not paid. For more informa-
information returns and when you have to file them, see tion, see your tax return instructions.
the General Instructions for Forms 1099, 1098, 5498, and Failure to withhold, deposit, or pay taxes. If you do not
W2G. withhold income, social security, or Medicare taxes from
Form 1099MISC. Use Form 1099MISC, Miscellane- employees, or if you withhold taxes but do not deposit
ous Income, to report certain payments you make in your them or pay them to the IRS, you may be subject to a
trade or business. These payments include the following penalty of the unpaid tax, plus interest. You may also be
items. subject to penalties if you deposit the taxes late. For more
information, see Publication 15.
Payments of $600 or more for services performed
for your business by people not treated as your em- Failure to follow information reporting requirements.
ployees, such as subcontractors, attorneys, account- The following penalties apply if you are required to file
ants, or directors. information returns. For more information, see the General
Instructions for Forms 1099, 1098, 5498, and W2G.
Rent payments of $600 or more, other than rents
paid to real estate agents. Failure to file information returns. A penalty ap-
plies if you do not file information returns by the due
Prizes and awards of $600 or more that are not for date, if you do not include all required information, or
services, such as winnings on TV or radio shows.
if you report incorrect information.
Royalty payments of $10 or more. Failure to furnish correct payee statements. A
Payments to certain crew members by operators of penalty applies if you do not furnish a required state-
fishing boats. ment to a payee by the required date, if you do not
include all required information, or if you report incor-
You also use Form 1099MISC to report your sales of
rect information.
$5,000 or more of consumer goods to a person for resale
anywhere other than in a permanent retail establishment.
Waiver of penalty. These penalties will not apply if you
can show that the failures were due to reasonable cause
Form W2. You must file Form W2, Wage and Tax
and not willful neglect.
Statement, to report payments to your employees, such as
In addition, there is no penalty for failure to include all
wages, tips, and other compensation, withheld income,
the required information, or for including incorrect informa-
social security, and Medicare taxes, and advance earned
tion, on a de minimis number of information returns if you
income credit payments. For more information on what to
correct the errors by August 1 of the year the returns are
report on Form W2, see the Instructions for Forms W2
due. (To be considered de minimis, the number of returns
and W3.
cannot exceed the greater of 10 or 1/2 of 1% of the total
Form 8300. You must file Form 8300, Report of Cash number of returns you are required to file for the year.)
Payments Over $10,000 Received in a Trade or Business,
Failure to supply taxpayer identification number. If
if you receive more than $10,000 in cash in one transaction
or two or more related business transactions. Cash in- you do not include your taxpayer identification number
cludes U.S. and foreign coin and currency. It also includes (SSN or EIN) or the taxpayer identification number of
another person where required on a return, statement, or
certain monetary instruments such as cashiers and
other document, you may be subject to a penalty of $50 for
travelers checks and money orders. For more information,
each failure. You may also be subject to the $50 penalty if
see Publication 1544, Reporting Cash Payments of Over
$10,000 (Received in a Trade or Business). you do not give your taxpayer identification number to
another person when it is required on a return, statement,
or other document.
Penalties
The law provides penalties for not filing returns or paying Business Expenses
taxes as required. Criminal penalties may be imposed for
You can deduct business expenses on your income tax
willful failure to file, tax evasion, or making a false state-
ment. return. These are the current operating costs of running
your business. To be deductible, a business expense must
Failure to file tax returns. If you do not file your tax return be both ordinary and necessary. An ordinary expense is
by the due date, you may have to pay a penalty. The one that is common and accepted in your field of business,
penalty is based on the tax not paid by the due date. See trade, or profession. A necessary expense is one that is
Page 9
STF PUB583F.9
helpful and appropriate for your business, trade, or profes- Individual Income Tax Return, or by changing your ac-
sion. An expense does not have to be indispensable to be counting method. For more information on how to correct
considered necessary. an incorrect depreciation deduction, see chapter 1 in Publi-
The following are brief explanations of some expenses cation 946.
that are of interest to people starting a business. There are
many other expenses that you may be able to deduct. See Business Use of Your Home
your form instructions and Publication 535, Business Ex-
penses. To deduct expenses related to the business use of part of
your home, you must meet specific requirements. Even
Business Start-Up Costs then, your deduction may be limited.
To qualify to claim expenses for business use of your
Business start-up costs are the expenses you incur before home, you must meet both the following tests.
you actually begin business operations. Your business
start-up costs will depend on the type of business you are 1) Your use of the business part of your home must be:
starting. They may include costs for advertising, travel, a) Exclusive (however, see Exceptions to exclusive
surveys, and training. These costs are capital expenses. use, later),
You usually recover costs for a particular asset (such as
b) Regular,
machinery or office equipment) through depreciation (dis-
cussed next). Other qualifying start-up costs can be recov- c) For your trade or business, AND
ered through amortization. This means you deduct them in
equal amounts over a period of 60 months or more. If you 2) The business part of your home must be one of the
do not choose to amortize these start-up costs, you gener- following:
ally cannot recover them until you sell the business or
otherwise go out of business. a) Your principal place of business (defined later),
For more information on business start-up costs, see b) A place where you meet or deal with patients,
chapter 9 in Publication 535. clients, or customers in the normal course of your
trade or business, or
Depreciation c) A separate structure (not attached to your home)
you use in connection with your trade or busi-
If property you acquire to use in your business has a useful ness.
life that extends substantially beyond the year it is placed
in service, you generally cannot deduct the entire cost as a
business expense in the year you acquire it. You must Exclusive use. To qualify under the exclusive use test,
spread the cost over more than one tax year and deduct you must use a specific area of your home only for your
part of it each year. This method of deducting the cost of trade or business. The area used for business can be a
business property is called depreciation. room or other separately identifiable space. The space
Business property you must depreciate includes the does not need to be marked off by a permanent partition.
following items. You do not meet the requirements of the exclusive use
test if you use the area in question both for business and
Office furniture. for personal purposes.
Buildings.
Exceptions to exclusive use. You do not have to meet
Machinery and equipment. the exclusive use test if either of the following applies.
You can choose to deduct a limited amount of the cost of 1) You use part of your home for the storage of inven-
certain depreciable property in the year you place the tory or product samples.
property in service. This deduction is known as the section
2) You use part of your home as a daycare facility.
179 deduction. You can take a special depreciation allow-
ance for certain property you acquire and place in service For an explanation of these exceptions, see Publication
before January 1, 2005. For more information about depre- 587, Business Use of Your Home (Including Use by Day-
ciation, the section 179 deduction, and the special depreci- care Providers).
ation allowance, see Publication 946, How To Depreciate
Property. Principal place of business. Your home office will qual-
ify as your principal place of business for deducting ex-
Depreciation must be taken in the year it is allow-
penses for its use if you meet the following requirements.
TIP able. Allowable depreciation not taken in a prior
year cannot be taken in the current year. If you do You use it exclusively and regularly for administra-
not deduct the correct depreciation, you may be able to tive or management activities of your trade or busi-
make a correction by filing Form 1040X, Amended U.S. ness.
Page 10
STF PUB583F.10
You have no other fixed location where you conduct the standard mileage rate for a vehicle you own or lease.
substantial administrative or management activities The standard mileage rate is a specified amount of money
of your trade or business. you can deduct for each business mile you drive. It is
announced annually by the IRS. To figure your deduction,
Alternatively, if you use your home exclusively and regu- multiply your business miles by the standard mileage rate
larly for your business, but your home office does not for the year.
qualify as your principal place of business based on the
Generally, if you use the standard mileage rate,
previous rules, you determine your principal place of busi-
ness based on the following factors. !
CAUTION
you cannot deduct your actual expenses. How-
ever, you may be able to deduct business-related
The relative importance of the activities performed at parking fees, tolls, interest on your car loan, and certain
each location. state and local taxes.
If the relative importance factor does not determine Choosing the standard mileage rate. If you want to
your principal place of business, the time spent at use the standard mileage rate for a car you own, you must
each location. choose to use it in the first year the car is available for use
in your business. In later years, you can choose to use
If, after considering your business locations, your home either the standard mileage rate or actual expenses.
cannot be identified as your principal place of business, If you use the standard mileage rate for a car you lease,
you cannot deduct home office expenses. However, for you must choose to use it for the entire lease period
other ways to qualify to deduct home office expenses, see (including renewals).
Publication 587.
Additional information. For more information about the
Which form do I file? If you file Schedule C (Form 1040), rules for claiming car and truck expenses, see Publication
use Form 8829, Expenses for Business Use of Your 463, Travel, Entertainment, Gift, and Car Expenses.
Home, to figure your deduction. If you file Schedule F
(Form 1040) or you are a partner, you can use the work-
sheet in Publication 587.
Recordkeeping
More information. For more information about business
use of your home, see Publication 587. This part explains why you must keep records, what kinds
of records you must keep, and how to keep them. It also
explains how long you must keep your records for federal
Car and Truck Expenses tax purposes. A sample recordkeeping system is illus-
If you use your car or truck in your business, you can trated at the end of this part.
deduct the costs of operating and maintaining it. You
generally can deduct either your actual expenses or the Why Keep Records?
standard mileage rate.
Everyone in business must keep records. Good records
Actual expenses. If you deduct actual expenses, you can will help you do the following.
deduct the cost of the following items:
Monitor the progress of your business. You need good
Depreciation Lease payments Registration records to monitor the progress of your business. Records
Garage rent Licenses Repairs can show whether your business is improving, which items
Gas Oil Tires are selling, or what changes you need to make. Good
Insurance Parking fees Tolls records can increase the likelihood of business success.
If you use your vehicle for both business and personal Prepare your financial statements. You need good rec-
purposes, you must divide your expenses between busi- ords to prepare accurate financial statements. These in-
ness and personal use. You can divide your expenses clude income (profit and loss) statements and balance
based on the miles driven for each purpose. sheets. These statements can help you in dealing with
your bank or creditors and help you manage your busi-
Example. You are the sole proprietor of a flower shop. ness.
You drove your van 20,000 miles during the year. 16,000
miles were for delivering flowers to customers and 4,000 An income statement shows the income and ex-
miles were for personal use. You can claim only 80% penses of the business for a given period of time.
(16,000 20,000) of the cost of operating your van as a A balance sheet shows the assets, liabilities, and
business expense. your equity in the business on a given date.
Standard mileage rate. Instead of figuring actual ex-
penses, you may be able to use the standard mileage rate Identify source of receipts. You will receive money or
to figure the deductible costs of operating your car, van, property from many sources. Your records can identify the
pickup, or panel truck for business purposes. You can use source of your receipts. You need this information to sepa-
Page 11
STF PUB583F.11
rate business from nonbusiness receipts and taxable from
Cash register tapes.
nontaxable income.
Bank deposit slips.
Keep track of deductible expenses. You may forget
expenses when you prepare your tax return unless you Receipt books.
record them when they occur. Invoices.
Prepare your tax returns. You need good records to Credit card charge slips.
prepare your tax returns. These records must support the
income, expenses, and credits you report. Generally, Forms 1099MISC.
these are the same records you use to monitor your busi-
ness and prepare your financial statements. Purchases. Purchases are the items you buy and resell to
customers. If you are a manufacturer or producer, this
Support items reported on tax returns. You must keep
your business records available at all times for inspection includes the cost of all raw materials or parts purchased for
by the IRS. If the IRS examines any of your tax returns, you manufacture into finished products. Your supporting docu-
may be asked to explain the items reported. A complete ments should show the amount paid and that the amount
set of records will speed up the examination. was for purchases. Documents for purchases include the
following.
Kinds of Records To Keep Canceled checks.
Except in a few cases, the law does not require any Cash register tape receipts.
specific kind of records. You can choose any recordkeep- Credit card sales slips.
ing system suited to your business that clearly shows your
income and expenses. Invoices.
The business you are in affects the type of records you These records will help you determine the value of your
need to keep for federal tax purposes. You should set up inventory at the end of the year. See Publication 538 for
your recordkeeping system using an accounting method information on methods for valuing inventory.
that clearly shows your income for your tax year. See
Accounting Method, earlier. If you are in more than one Expenses. Expenses are the costs you incur (other than
business, you should keep a complete and separate set of purchases) to carry on your business. Your supporting
records for each business. A corporation should keep documents should show the amount paid and that the
minutes of board of directors meetings. amount was for a business expense. Documents for ex-
Your recordkeeping system should include a summary penses include the following.
of your business transactions. This summary is ordinarily
made in your books (for example, accounting journals and Canceled checks.
ledgers). Your books must show your gross income, as Cash register tapes.
well as your deductions and credits. For most small busi-
nesses, the business checkbook (discussed later) is the Account statements.
main source for entries in the business books. In addition, Credit card sales slips.
you must keep supporting documents, explained next.
Invoices.
Supporting Documents Petty cash slips for small cash payments.
Purchases, sales, payroll, and other transactions you have A petty cash fund allows you to make small pay-
in your business generate supporting documents. Support- TIP ments without having to write checks for small
ing documents include sales slips, paid bills, invoices, amounts. Each time you make a payment from
receipts, deposit slips, and canceled checks. These docu- this fund, you should make out a petty cash slip and attach
ments contain information you need to record in your it to your receipt as proof of payment.
books.
It is important to keep these documents because they Travel, transportation, entertainment, and gift ex-
support the entries in your books and on your tax return. penses. Specific recordkeeping rules apply to these ex-
Keep them in an orderly fashion and in a safe place. For penses. For more information, see Publication 463.
instance, organize them by year and type of income or
Employment taxes. There are specific employment
expense.
tax records you must keep. For a list, see Publication 15.
Gross receipts. Gross receipts are the income you re-
ceive from your business. You should keep supporting Assets. Assets are the property, such as machinery and
documents that show the amounts and sources of your furniture you own and use in your business. You must keep
gross receipts. Documents that show gross receipts in- records to verify certain information about your business
clude the following. assets. You need records to figure the annual depreciation
Page 12
STF PUB583F.12
and the gain or loss when you sell the assets. Your records Recording Business Transactions
should show the following information.
A good recordkeeping system includes a summary of your
When and how you acquired the asset. business transactions. (Your business transactions are
Purchase price. shown on the supporting documents just discussed.) Busi-
ness transactions are ordinarily summarized in books
Cost of any improvements. called journals and ledgers. You can buy them at your local
stationery or office supply store.
Section 179 deduction taken.
A journal is a book where you record each business
Deductions taken for depreciation. transaction shown on your supporting documents. You
Deductions taken for casualty losses, such as losses may have to keep separate journals for transactions that
occur frequently.
resulting from fires or storms.
A ledger is a book that contains the totals from all of
How you used the asset. your journals. It is organized into different accounts.
Whether you keep journals and ledgers and how you
When and how you disposed of the asset.
keep them depends on the type of business you are in. For
Selling price. example, a recordkeeping system for a small business
might include the following items.
Expenses of sale.
Business checkbook.
The following documents may show this information.
Daily summary of cash receipts.
Purchase and sales invoices. Monthly summary of cash receipts.
Real estate closing statements. Check disbursements journal.
Canceled checks. Depreciation worksheet.
Employee compensation record.
What if I dont have a canceled check? If you do not
have a canceled check, you may be able to prove payment The business checkbook is explained next. The other
with certain financial account statements prepared by fi- items are illustrated later under Sample Record System.
nancial institutions. These include account statements pre-
The system you use to record business transac-
pared for the financial institution by a third party. These
TIP tions will be more effective if you follow good
account statements must be highly legible. The following recordkeeping practices. For example, record ex-
table lists acceptable account statements. penses when they occur, and identify the source of re-
corded receipts. Generally, it is best to record transactions
THEN the statement must
IF payment is by... show the... on a daily basis.
Check
Business checkbook. One of the first things you should
Check number.
do when you start a business is open a business checking
Amount.
account. You should keep your business account separate
Payees name.
from your personal checking account.
Date the check amount
was posted to the account The business checkbook is your basic source of infor-
by the financial institution. mation for recording your business expenses. You should
deposit all daily receipts in your business checking ac-
Electronic funds transfer Amount transferred. count. You should check your account for errors by recon-
Payees name. ciling it. See Reconciling the checking account, later.
Date the transfer was Consider using a checkbook that allows enough space
posted to the account by to identify the source of deposits as business income,
the financial institution. personal funds, or loans. You should also note on the
deposit slip the source of the deposit and keep copies of all
Credit card Amount charged. slips.
Payees name. You should make all payments by check to document
Transaction date. business expenses. Write checks payable to yourself only
when making withdrawals from your business for personal
use. Avoid writing checks payable to cash. If you must
Proof of payment of an amount, by itself, does not write a check for cash to pay a business expense, include
! establish you are entitled to a tax deduction. You
should also keep other documents, such as credit
the receipt for the cash payment in your records. If you
CAUTION
cannot get a receipt for a cash payment, you should make
card sales slips and invoices, to show that you also in- an adequate explanation in your records at the time of
curred the cost. payment.
Page 13
STF PUB583F.13
Use the business account for business purposes your checkbook with the bank statement. Many banks print
TIP only. Indicate the source of deposits and the type a reconciliation worksheet on the back of the statement.
of expense in the checkbook. To reconcile your account, follow these steps.
Reconciling the checking account. When you re- 1) Compare the deposits listed on the bank statement
ceive your bank statement, make sure the statement, your with the deposits shown in your checkbook. Note all
checkbook, and your books agree. The statement balance differences in the dollar amounts.
may not agree with the balance in your checkbook and 2) Compare each canceled check, including both check
books if the statement: number and dollar amount, with the entry in your
checkbook. Note all differences in the dollar
Includes bank charges you did not enter in your
amounts. Mark the check number in the checkbook
books and subtract from your checkbook balance, or
as having cleared the bank. After accounting for all
Does not include deposits made after the statement checks returned by the bank, those not marked in
date or checks that did not clear your account before your checkbook are your outstanding checks.
the statement date.
3) Prepare a bank reconciliation. One is illustrated later
under Sample Record System.
By reconciling your checking account, you will:
4) Update your checkbook and journals for items shown
Verify how much money you have in the account, on the reconciliation as not recorded (such as serv-
Make sure that your checkbook and books reflect all ice charges) or recorded incorrectly.
bank charges and the correct balance in the check- At this point, the adjusted bank statement balance should
ing account, and equal your adjusted checkbook balance. If you still have
Correct any errors in your bank statement, check- differences, check the previous steps to find the errors.
book, and books.
Bookkeeping System
You should reconcile your checking account each
TIP month. You must decide whether to use a single-entry or a
double-entry bookkeeping system. The single-entry sys-
tem of bookkeeping is the simplest to maintain, but it may
Before you reconcile your monthly bank statement, not be suitable for everyone. You may find the double-en-
check your own figures. Begin with the balance shown in try system better because it has built-in checks and bal-
your checkbook at the end of the previous month. To this ances to assure accuracy and control.
balance, add the total cash deposited during the month
and subtract the total cash disbursements. Single-entry. A single-entry system is based on the in-
After checking your figures, the result should agree with come statement (profit or loss statement). It can be a
your checkbook balance at the end of the month. If the simple and practical system if you are starting a small
result does not agree, you may have made an error in business. The system records the flow of income and
recording a check or deposit. You can find the error by expenses through the use of:
doing the following. 1) A daily summary of cash receipts, and
1) Adding the amounts on your check stubs and com- 2) Monthly summaries of cash receipts and disburse-
paring that total with the total in the amount of ments.
check column in your check disbursements journal.
If the totals do not agree, check the individual
Double-entry. A double-entry bookkeeping system uses
amounts to see if an error was made in your check journals and ledgers. Transactions are first entered in a
stub record or in the related entry in your check journal and then posted to ledger accounts. These ac-
disbursements journal. counts show income, expenses, assets (property a busi-
2) Adding the deposit amounts in your checkbook. ness owns), liabilities (debts of a business), and net worth
Compare that total with the monthly total in your (excess of assets over liabilities). You close income and
cash receipt book, if you have one. If the totals do expense accounts at the end of each tax year. You keep
not agree, check the individual amounts to find any asset, liability, and net worth accounts open on a perma-
errors. nent basis.
In the double-entry system, each account has a left side
If your checkbook and journal entries still disagree, then for debits and a right side for credits. It is self-balancing
refigure the running balance in your checkbook to make because you record every transaction as a debit entry in
sure additions and subtractions are correct. one account and as a credit entry in another.
When your checkbook balance agrees with the balance Under this system, the total debits must equal the total
figured from the journal entries, you may begin reconciling credits after you post the journal entries to the ledger
Page 14
STF PUB583F.14
accounts. If the amounts do not balance, you have made Controls used to prevent the unauthorized addition,
an error and you must find and correct it. alteration, or deletion of retained records.
An example of a journal entry exhibiting a payment of
Charts of accounts and detailed account descrip-
rent in October is shown next.
tions.
General Journal See Revenue Procedure 9825 in Cumulative Bulletin
19981 for more information.
Date Description of Entry Debit Credit
Microfilm
Oct. 5 Rent expense 780.00
Microfilm and microfiche reproductions of general books of
accounts, such as cash books, journals, voucher registers,
Cash 780.00 and ledgers, are accepted for recordkeeping purposes if
they comply with Revenue Procedure 8146 in Cumula-
tive Bulletin 19812.
Electronic Storage System

Records maintained in an electronic storage system are
accepted for recordkeeping purposes if the system com-
Computerized System plies with Revenue Procedure 9722 in Cumulative Bulle-
There are computer software packages you can use for tin 19971.
recordkeeping. They can be purchased in many retail An electronic storage system is one that either images
stores. These packages are very helpful and relatively hardcopy (paper) books and records or transfers comput-
easy to use; they require very little knowledge of book- erized books and records to an electronic storage media,
keeping and accounting. such as an optical disk.
If you use a computerized system, you must be able to
produce sufficient legible records to support and verify
entries made on your return and determine your correct tax
How Long To Keep Records
liability. To meet this qualification, the machine-sensible You must keep your records as long as they may be
records must reconcile with your books and return. These
needed for the administration of any provision of the Inter-
records must provide enough detail to identify the underly-
nal Revenue Code. Generally, this means you must keep
ing source documents.
records that support an item of income or deduction on a
You must also keep all machine-sensible records and a
return until the period of limitations for that return runs out.
complete description of the computerized portion of your
recordkeeping system. This documentation must be suffi- The period of limitations is the period of time in which
ciently detailed to show all of the following items. you can amend your return to claim a credit or refund, or
the IRS can assess additional tax. Table 3 below contains
Functions being performed as the data flows through the periods of limitations that apply to income tax returns.
the system.
Unless otherwise stated, the years refer to the period after
Controls used to ensure accurate and reliable the return was filed. Returns filed before the due date are
processing. treated as filed on the due date.
Table 3. Period of Limitations

IF you... THEN the period is...
1. Owe additional tax and situations (2), (3), and (4), below, do not apply to you 3 years
2. Do not report income that you should report and it is more than 25% of the gross 6 years
income shown on the return
3. File a fraudulent return Not limited
4. Do not file a return Not limited
5. File a claim for credit or refund after you filed your return Later of: 3 years or
2 years after tax
was paid
6. File a claim for a loss from worthless securities or a bad debt deduction 7 years
Page 15
STF PUB583F.15
Keep copies of your filed tax returns. They help in he makes out a petty cash slip and attaches it to his receipt
TIP preparing future tax returns and making computa- as proof of payment. He sets up a fixed amount ($50) in his
tions if you file an amended return. petty cash fund. The total of the unspent petty cash and the
amounts on the petty cash slips should equal the fixed
Employment taxes. If you have employees, you must amount of the fund. When the totals on the petty cash slips
keep all employment tax records for at least 4 years after approach the fixed amount, he brings the cash in the fund
the date the tax becomes due or is paid, whichever is later. back to the fixed amount by writing a check to Petty Cash
For more information about recordkeeping for employment for the total of the outstanding slips. (See the Check Dis-
taxes, see Publication 15. bursements Journal entry for check number 92.) This re-
stores the fund to its fixed amount of $50. He then
Assets. Keep records relating to property until the period summarizes the slips and enters them in the proper col-
of limitations expires for the year in which you dispose of umns in the monthly check disbursements journal.
the property in a taxable disposition. You must keep these
records to figure any depreciation, amortization, or deple-
tion deduction, and to figure your basis for computing gain 2. Monthly Summary of Cash Receipts
or loss when you sell or otherwise dispose of the property. (Page 19)
Generally, if you received property in a nontaxable ex-
change, your basis in that property is the same as the basis This shows the income activity for the month. Henry carries
of the property you gave up, increased by any money you the total monthly net sales shown in this summary for
paid. You must keep the records on the old property, as January ($4,865.05) to his Annual Summary.
well as on the new property, until the period of limitations To figure total monthly net sales, Henry reduces the
expires for the year in which you dispose of the new total monthly receipts by the sales tax imposed on his
property in a taxable disposition. customers and turned over to the state. He cannot take a
deduction for sales tax turned over to the state because he
Records for nontax purposes. When your records are
only collected the tax. He does not include the tax in his
no longer needed for tax purposes, do not discard them
income.
until you check to see if you have to keep them longer for
other purposes. For example, your insurance company or
creditors may require you to keep them longer than the IRS 3. Check Disbursements Journal (Pages 20
does. and 21)
Sample Record System Henry enters checks drawn on the business checking
account in the Check Disbursements Journal each day. All
This example illustrates a single-entry system used by checks are prenumbered and each check number is listed
Henry Brown, who is the sole proprietor of a small automo- and accounted for in the column provided in the journal.
bile body shop. Henry uses part-time help, has no inven- Frequent expenses have their own headings across the
tory of items held for sale, and uses the cash method of sheet. He enters in a separate column expenses that
accounting. require comparatively numerous or large payments each
These sample records should not be viewed as a rec- month, such as materials, gross payroll, and rent. Under
ommendation of how to keep your records. They are in- the General Accounts column, he enters small expenses
tended only to show how one business keeps its records. that normally have only one or two monthly payments,
such as licenses and postage.
1. Daily Summary of Cash Receipts Henry does not pay personal or nonbusiness expenses
(Page 18) by checks drawn on the business account. If he did, he
would record them in the journal, even though he could not
This summary is a record of cash sales for the day. It deduct them as business expenses.
accounts for cash at the end of the day over the amount in Henry carries the January total of expenses for materi-
the Change and Petty Cash Fund at the beginning of the als ($1,083.50) to the Annual Summary. Similarly, he en-
day. ters the monthly total of expenses for telephone, truck/
Henry takes the cash sales entry from his cash register auto, etc., in the appropriate columns of that summary.
tape. If he had no cash register, he would simply total his
cash sale slips and any other cash received that day.
He carries the total receipts shown in this summary for 4. Employee Compensation Record
January 3 ($267.80), including cash sales ($263.60) and (Page 22)
sales tax ($4.20), to the Monthly Summary of Cash Re-
This record shows the following information.
ceipts.
The number of hours Henrys employee worked in a
Petty cash fund. Henry uses a petty cash fund to make
pay period.
small payments without having to write checks for small
amounts. Each time he makes a payment from this fund, The employees total pay for the period.
Page 16
STF PUB583F.16
The deductions Henry withheld in figuring the lowance. Depreciation, the section 179 deduction, and the
employees net pay. special depreciation allowance are discussed in Publica-
tion 946. Henry uses the information in the worksheet to
The monthly gross payroll.
complete Form 4562, Depreciation and Amortization (not
Henry carries the January gross payroll ($520) to the illustrated).
Annual Summary.
5. Annual Summary (Page 22) 7. Bank Reconciliation (Page 23)
This annual summary of monthly cash receipts and ex- Henry reconciles his checkbook with his bank statement
pense totals provides the final amounts to enter on Henrys and prepares a bank reconciliation for January as follows.
tax return. He figures the cash receipts total from the total
of monthly cash receipts shown in the Monthly Summary of 1) Henry begins by entering his bank statement bal-
Cash Receipts. He figures the expense totals from the ance.
totals of monthly expense items shown in the Check Dis- 2) Henry compares the deposits listed on the bank
bursements Journal. As in the journal, he keeps each statement with deposits shown in his checkbook.
major expense in a separate column. Two deposits shown in his checkbook $701.33
Henry carries the cash receipts total shown in the an-
and $516.08were not on his bank statement. He
nual summary ($47,440.95) to Part I of Schedule C (not
enters these two amounts on the bank reconciliation.
illustrated). He carries the total for materials ($10,001.00)
He adds them to the bank statement balance of
to Part II of Schedule C.
$1,458.12 to arrive at a subtotal of $2,675.53.
A business that keeps materials and supplies on
3) After comparing each canceled check with his check-
!
CAUTION
hand generally must complete the inventory lines
in Part III of Schedule C. However, there are no
book, Henry found four outstanding checks totaling
inventories of materials and supplies in this example. $526.50. He subtracts this amount from the subtotal
Henry buys parts and supplies on a per-job basis; he does in (2). The result of $2,149.03 is the adjusted bank
not keep them on hand. statement balance.
Henry enters annual totals for interest, rent, taxes, and 4) Henry enters his checkbook balance on the bank
wages on the appropriate lines in Part II of Schedule C. reconciliation.
The total for taxes and licenses includes the employers
5) Henry discovered that he mistakenly entered a de-
share of social security and Medicare taxes, and the busi-
posit of $600.40 in his checkbook as $594.40. He
ness license fee. He enters the total of other annual
adds the difference ($6.00) to the checkbook bal-
business expenses on the Other expenses line of
Schedule C. ance of $2,153.03. There was a $10.00 bank service
charge on his bank statement that he subtracts from
the checkbook balance. The result is the adjusted
6. Depreciation Worksheet (Page 22) checkbook balance of $2,149.03. This equals his ad-
justed bank statement balance computed in (3).
This worksheet shows the information used in figuring the
depreciation allowed on assets used in Henrys business. The only book adjustment Henry needs to make is to the
Henry figures the depreciation using the modified acceler- Check Disbursements Journal for the $10 bank service
ated cost recovery system (MACRS). He purchased and charge. He does not need to adjust the Monthly Summary
placed in service several used assets that do not qualify for of Cash Receipts because he correctly entered the Janu-
the section 179 deduction or the special depreciation al- ary 8 deposit of $600.40 in that record.
Page 17
STF PUB583F.17
1. Daily Summary of Cash Receipts
Date January 3, 20
Cash sales 263.60
Sales tax 4.20
TOTALRECEIPTS 267.80
Cash on hand
Cash in register (including unspent petty cash)
Coins 23.75
Bills 143.00
Checks 134.05

TOTAL CASH IN REGISTER 300.80
Add: Petty cash slips 17.00
TOTALCASH 317.80
Less: Change and petty cash
Petty cash slips 17.00
Coins and bills 33.00

(unspent petty cash)

TOTALCHANGEAND PETTYCASH FUND 50.00
TOTALCASHRECEIPTS 267.80
Page 18
STF PUB583F.18
2. Monthly Summary of Cash Receipts
Year 20 Month January
Day Net Sales Sales Tax Daily Receipts Deposit
3 263.60 4.20 267.80
4 212.00 3.39 215.39
5 194.40 3.10 197.50 680.69
6 222.40 3.54 225.94
7 231.15 3.68 234.83
8 137.50 2.13 139.63 600.40
10 187.90 2.99 190.89
11 207.56 3.31 210.87 401.76
12 128.95 2.05 131.00
13 231.40 3.77 235.17
14 201.28 3.21 204.49
15 88.01 1.40 89.41 660.07
17 210.95 3.36 214.31
18 221.80 3.53 225.33 439.64
19 225.15 3.59 228.74
20 221.93 3.52 225.45
21 133.53 2.13 135.66 589.85
22 130.84 2.08 132.92
24 216.37 3.45 219.82 352.74
25 220.05 3.50 223.55
26 197.80 3.15 200.95
27 272.49 4.34 276.83 701.33
28 150.64 2.40 153.04
29 224.05 3.56 227.61
31 133.30 2.13 135.43 516.08
TOTALS 4,865.05 77.51 4,942.56 4,942.56
Page 19
STF PUB583F.19
3. Check Disbursements Journal
Year 20 Month January
Federal FICA
Withheld Social FICA
Check Amount of Gross Income Security Medicare
Day Paid To # Check Materials Payroll Tax Reserve Reserve
3 Dale Advertising 74 85.00
4 City Treasurer 75 35.00
4 Auto Parts, Inc. 76 203.00 203.00
4 John E. Marks 77 214.11 260.00 (20.00) (16.12) (3.77)
6 Henry Brown 78 250.00
6 Mikes Deli 79 36.00
6 Joes Service Station 80 74.50 29.50
6 ABC Auto Paint 81 137.50 137.50
14 Telephone Co. 83 27.00
National Bank (Tax
15 Deposit) 84 119.56 40.00 32.24 7.54
18 National Bank 85 90.09
18 Auto Parts, Inc. 86 472.00 472 .00
18 John E. Marks 88 214.11 260.00 (20.00) (16.12) (3.77)
21 Electric Co. 89 175.30
21 M.B. Ignition 90 66.70 66.70
21 Bakers Fender Co. 91 9.80 9.80
21 Petty Cash 92 17.00 15.00
25 Bakers Fender Co. 94 150.00 150.00
25 Enterprise Properties 95 300.00
25 State Treasurer 96 12.00
25 State Treasurer 97 65.00
3,478.67 1,083.50 520.00 -0- -0- -0-
Bank service charge 10.00
TOTALS 3,488.67 1,083.50 520.00 -0- -0- -0-
Page 20
STF PUB583F.20
3. Check Disbursements Journal (Continued)
State
Withheld Employers
Income FICA Truck/
Tax Tax Electric Interest Rent Telephone Auto Drawing General Accounts
Advertising 85.00
License 35.00
(6.00)
250.00
Holiday Party 36.00
45.00
225.00
27.00
39.78
18.09 Loan 72.00
275.00
(6.00)
175.30
Postage 2.00
225.00
300.00
12.00
Sales Tax 65.00
-0- 39.78 175.30 18.09 300.00 27.00 45.00 975.00 295.00
10.00
-0- 39.78 175.30 18.09 300.00 27.00 45.00 975.00 305.00
Page 21
STF PUB583F.21
4. Employee Compensation Record
Name John E. Marks Full Time Soc. Sec. No. 567-00-8901
Address 1 Elm St., Anytown, NJ 07101 Date of Birth 12-21-65

X Part Time
Phone 555-6075 No. of Exemptions 1 / single
Hours Worked Earnings Deductions

Pay Total Federal State
Period Date Regular Regular Overtime Social Income Income
Ending Paid S M T W T FS S M T W T F S Hours Overtime Rate Rate Total Security Medicare Tax Tax Net Pay
1- 1 1- 4 5 55 5 5 546 40 $6.50 . $260.00 $16.12 $3.77 $20.00 $6.00 $214.11

1- 1 5 1 - 1 8 4 4 4 4 4 2 43443 40 $6.50 . $260.00 $16.12 $3.77 $20.00 $6.00 $214.11
80 . . $520.00 $32.24 $7.54 $40.00 $12.00 $428.22
. . . . . . . .
QUARTERLYTOTALS . . $1,262.40 $78.23 $18.31 $100.00 $30.00 $1,035.86
5. Annual Summary
Cash Materials/ Gross FICA Bank Truck/ Office Taxes/

Month Receipts Supplies Payroll Taxes Charges Electric Interest Insurance Rent Telephones Auto Advertising Expenses Licenses Misc.
January $4,865.05 $1,083.50 $520.00 $39.78 $10.00$175.30 $18.09 . $300.00 $27.00 $45.00 $85.00 $36.00 $100.00 $2.00
February 3,478.32 874.93 235.40 17.68 7.50 153.10 18.09 210.00 300.00 21.50 28.50 . . . .
March 3,942.00 724.90 507.00 38.08 11.25 145.81 18.09 . 300.00 32.10 51.30 . . . .
December 3,656.52 609.23 520.00 39.78 10.00 169.00 18.09 . 300.00 23.13 37.62 . 4.00 . 71.91
TOTALS $47,440.95 $10,001.00 $5,434.00 $408.09 $92.30 $1,642.37 $217.08$420.00 $3,600.00 $324.09 $571.46 $85.00 $40.00 $218.00 $344.00
6. Depreciation Worksheet
Section 179
Business/ Deduction Depreci-
Date Placed Cost or Investment and Special ation Prior Basis for Method/ Recovery Rate or Depreciation
Description of Property in Service Other Basis Use % Allowance Years Depreciation Convention Period Table % Deduction
Used Equipment
Transmission Jack 1- 3 3,000 100% 3,000 200 DB/HY 7 14.29% $429
Used PickupTruck 1- 3 8,000 100% 8,000 200 DB/HY 5 20% 1,600

Used Heavy Duty
TowTruck 1- 3 30,000 100% 30,000 200 DB/HY 5 20% 6,000
Used Equipment
Engine Hoist 1- 3 4,000 100% 4,000 200 DB/HY 7 14.29% 572
$8,601
Page 22
STF PUB583F.22
7. Bank Reconciliation as of
Date January 31, 20
Closing balance shown on bank statement 1,458.12
Add deposits not credited:

1/28 701.33
1/31 516.08

TOTAL DEPOSITSNOT CREDITED 1,217.41
Subtotal 2,675.53
Subtract outstanding checks:
No. 90 66.70
91 9.80
94 150.00
95 300.00

TOTAL OUTSTANDING CHECKS 526.50
Adjusted balance per bank statement 2,149.03
Balance shown in checkbook 2,153.03
Deposit of $600.40 for

Add: 1/8 entered as 6.00
$594.40 (difference)
2,159.03
Subtract: Bank service charge 10.00
Adjusted checkbook balance 2,149.03
Page 23
STF PUB583F.23
including tax education and assistance programs and a list
How To Get More Information of TeleTax topics.
Internet. You can access the IRS website 24
This section describes the help the IRS and other federal
hours a day, 7 days a week, at www.irs.gov to:
agencies offer to taxpayers who operate their own busi-
nesses.
E-file. Access commercial tax preparation and e-file
Internal Revenue Service services available for free to eligible taxpayers.
Check the status of your federal income tax refund.
You can get help with unresolved tax issues, order free Click on Wheres My Refund. Be sure to wait at
publications and forms, ask tax questions, and get more least 6 weeks from the date you filed your return (3
information from the IRS in several ways. By selecting the weeks if you filed electronically) and have your fed-
method that is best for you, you will have quick and easy eral income tax return available because you will
access to tax help. need to know your filing status and the exact whole
dollar amount of your refund.
Contacting your Taxpayer Advocate. If you have at-
tempted to deal with an IRS problem unsuccessfully, you Download forms, instructions, and publications.
should contact your Taxpayer Advocate. Order IRS products online.
The Taxpayer Advocate independently represents your
interests and concerns within the IRS by protecting your See answers to frequently asked tax questions.
rights and resolving problems that have not been fixed Search publications online by topic or keyword.
through normal channels. While Taxpayer Advocates can-
not change the tax law or make a technical tax decision, Figure your withholding allowances using our Form
they can clear up problems that resulted from previous W4 calculator.
contacts and ensure that your case is given a complete Send us comments or request help by email.
and impartial review.
To contact your Taxpayer Advocate: Sign up to receive local and national tax news by
email.
Call the Taxpayer Advocate at 18777774778.
Get information on starting and operating a small
Call, write, or fax the Taxpayer Advocate office in business.
your area.
Call 18008294059 if you are a TTY/TDD user. You can also reach us using File Transfer Protocol at
ftp.irs.gov.
Visit the website at www.irs.gov/advocate.
Fax. You can get over 100 of the most requested
For more information, see Publication 1546, The Tax- forms and instructions 24 hours a day, 7 days a
payer Advocate Service of the IRS. week, by fax. Just call 7033689694 from your
fax machine. Follow the directions from the prompts. When
Small Business Tax Education Program. Small busi- you order forms, enter the catalog number for the form you
ness owners and other self-employed individuals can learn need. The items you request will be faxed to you.
about business taxes through a unique partnership be- F o r h e l p with t r a n s m i s s i o n p r o b l e m s , c a l l
tween the IRS and local organizations. Through work- 7034874608.
shops or in-depth tax courses, instructors provide training
on starting a business, recordkeeping, preparing business Long-distance charges may apply.
tax returns, self-employment tax issues, and employment
Phone. Many services are available by phone.
taxes.
Some courses are offered free as a community service.
Courses given by an educational facility may include costs
for materials and tuition. Other courses may have a nomi- Ordering forms, instructions, and publications. Call
nal fee to offset administrative costs of sponsoring organi- 18008293676 to order current-year forms, in-
zations. structions, and publications and prior-year forms and
For more information about this program, call the IRS instructions. You should receive your order within 10
Monday through Friday during regular business hours. days.
Check your telephone book for the local number of the IRS
Asking tax questions. Call the IRS with your tax
office closest to you or you can call 18008291040.
questions at 18008294933.
Free tax services. To find out what services are avail- Solving problems. You can get face-to-face help
able, get Publication 910, Guide to Free Tax Services. It solving tax problems every business day in IRS Tax-
contains a list of free tax publications and an index of tax payer Assistance Centers. An employee can explain
topics. It also describes other free tax information services, IRS letters, request adjustments to your account, or
Page 24
STF PUB583F.24
help you set up a payment plan. Call your local look in the phone book under United States Govern-
Taxpayer Assistance Center for an appointment. To ment, Internal Revenue Service.
find the number, go to www.irs.gov or look in the
phone book under United States Government, Inter- Mail. You can send your order for forms, instruc-
nal Revenue Service. tions, and publications to the Distribution Center
TTY/TDD equipment. If you have access to TTY/ nearest to you and receive a response within 10
TDD equipment, call 18008294059 to ask tax workdays after your request is received. Find the address
or account questions or to order forms and publica- that applies to your part of the country.
tions. Western part of U.S.:
TeleTax topics. Call 18008294477 to listen to Western Area Distribution Center
pre-recorded messages covering various tax topics. Rancho Cordova, CA 957430001
Refund information. If you would like to check the Central part of U.S.:
status of your federal income tax refund, call Central Area Distribution Center
18008294477 for automated refund information P.O. Box 8903
and follow the recorded instructions or call Bloomington, IL 617028903
18008291954. Be sure to wait at least 6 weeks Eastern part of U.S. and foreign addresses:
from the date you filed your return (3 weeks if you Eastern Area Distribution Center
filed electronically) and have your federal income tax P.O. Box 85074
return available because you will need to know your Richmond, VA 232615074
filing status and the exact whole dollar amount of
your refund.
CD-ROM for tax products. You can order IRS
Publication 1796, Federal Tax Products on
Evaluating the quality of our telephone services. To CD-ROM, and obtain:
ensure that IRS representatives give accurate, courteous,
and professional answers, we use several methods to
evaluate the quality of our telephone services. One method Current-year tax forms, instructions, and publica-
is for a second IRS representative to sometimes listen in tions.
on or record telephone calls. Another is to ask some callers Prior-year forms and instructions.
to complete a short survey at the end of the call.
Frequently requested tax forms that may be filled in
electronically, printed out for submission, and saved
Walk-in. Many products and services are avail-
for recordkeeping.
able on a walk-in basis.
Internal Revenue Bulletins.
Products. You can walk in to many post offices, Buy the CD-ROM from National Technical Information
libraries, and IRS offices to pick up certain forms,
Service (NTIS) on the Internet at www.irs.gov/cdorders
instructions, and publications. Some IRS offices, li-
for $22(no handling fee) or call 18772336767 toll-free
braries, grocery stores, copy centers, city and county
to buy the CD-ROM for $22 (plus a $5 handling fee). The
government offices, credit unions, and office supply
first release is available in early January and the final
stores have a collection of products available to print
release is available in late February.
from a CD-ROM or photocopy from reproducible
proofs. Also, some IRS offices and libraries have the CD-ROM for small businesses. IRS Publication
Internal Revenue Code, regulations, Internal Reve- 3207, Small Business Resource Guide, is a must
nue Bulletins, and Cumulative Bulletins available for for every small business owner or any taxpayer
research purposes. about to start a business. This handy, interactive CD con-
Services. You can walk in to your local Taxpayer tains all the business tax forms, instructions and publica-
Assistance Center every business day to ask tax tions needed to successfully manage a business. In
questions or get help with a tax problem. An em- addition, the CD provides an abundance of other helpful
ployee can explain IRS letters, request adjustments information, such as how to prepare a business plan,
to your account, or help you set up a payment plan. finding financing for your business, and much more. The
You can set up an appointment by calling your local design of the CD makes finding information easy and quick
Center and, at the prompt, leaving a message re- and incorporates file formats and browsers that can be run
questing Everyday Tax Solutions help. A representa- on virtually any desktop or laptop computer.
tive will call you back within 2 business days to It is available in early April. You can get a free copy by
schedule an in-person appointment at your conve- calling 18008293676 or by visiting the website at
nience. To find the number, go to www.irs.gov or www.irs.gov/smallbiz.
Page 25
STF PUB583F.25
Comments on IRS enforcement actions. The Small manage, and expand a small business. SCORE also offers
Business and Agriculture Regulatory Enforcement a variety of small business workshops.
Ombudsman and 10 Regional Fairness Boards were es-
Internet. You can access the SBA website at
tablished to receive comments from small business about
www.sba.gov. While visiting the SBA website,
federal agency enforcement actions. The Ombudsman will
you can find a variety of information of interest to
annually evaluate the enforcement activities of each
small business owners.
agency and rate its responsiveness to small business. If
you wish to comment on the enforcement actions of the Phone. Call the SBA Answer Desk at
IRS, you can: 1800UASKSBA (18008275722) for
Call 1888REGFAIR (18887343247),, general information about programs available to
assist small business owners.
Send an email to ombudsman@sba.gov, or
Walk-in. You can walk in to a Small Business
Download the appraisal form at www.sba.gov/ Development Center or Business Information
ombudsman.
Center to request assistance with your small
business. To find the location nearest you, access the SBA
on the Internet or call the SBA Answer Desk.
Small Business Administration
The Small Business Administration (SBA) offers training Other Federal Agencies
and educational programs, counseling services, financial
programs, and contract assistance for small business own- Other federal agencies also publish publications and pam-
ers. The SBA also has publications and videos on a variety phlets to assist small businesses. Most of these are avail-
of business topics. The following briefly describes assis- able from the Superintendent of Documents at the
tance provided by the SBA. Government Printing Office. You can get information and
order these publications and pamphlets in several ways.
Small Business Development Centers (SBDCs).
SBDCs provide counseling, training, and technical serv- Internet. You can access the GPO website at
ices to current and prospective small business owners who www.access.gpo.gov.
cannot afford the services of a private consultant. Help is
available when beginning, improving, or expanding a small
business.
Phone. Call the GPO toll-free at
Business Information Centers (BICs). BICs offer a
18665121800 or at (202) 5121800 from
small business reference library, management video
the local Washington, DC area.
tapes, and computer technology to help plan a business.
BICs also offer one-on-one assistance. Individuals who
are in business or are interested in starting a business can Mail. Write to the GPO at the following address.
use BICs as often as they wish at no charge.
Service Corps of Retired Executives (SCORE).
SCORE provides small business counseling and training
to current and prospective small business owners. SCORE Superintendent of Documents
is made up of current and former business people who P.O. Box 371954
offer their expertise and knowledge to help people start, Pittsburgh, PA 152507954
Page 26
STF PUB583F.26
To help us develop a more useful index, please let us know if you have ideas for index entries.
Index See Comments and Suggestions in the Introduction for the ways you can reach us.
A 720 . . . . . . . . . . . . . . . . . . . . . . . 8 Penalties . . . . . . . . . . . . . . . . . . . . 9
Accounting method: 730 . . . . . . . . . . . . . . . . . . . . . . . 8 Publications (See Tax help)
Accrual method . . . . . . . . . . . . . . 5 8109 . . . . . . . . . . . . . . . . . . . . . . 8
Cash method . . . . . . . . . . . . . . . 5 8300 . . . . . . . . . . . . . . . . . . . . . . 9 R
Assistance (See Tax help) 8829 . . . . . . . . . . . . . . . . . . . . . 11
Recordkeeping . . . . . . . . . . . . . . 11
I9 . . . . . . . . . . . . . . . . . . . . . . . 7
Records, how long to keep . . . . 15
SS4 . . . . . . . . . . . . . . . . . . . . . 4
B W2 . . . . . . . . . . . . . . . . . . . . 7, 9
Business: W4 . . . . . . . . . . . . . . . . . . . . . . 7 S
Expenses . . . . . . . . . . . . . . . . . . 9 W5 . . . . . . . . . . . . . . . . . . . . . . 7 S corporation . . . . . . . . . . . . . . . . 3
Start-up costs . . . . . . . . . . . . . . 10 Self-employment tax . . . . . . . . . . 5
W9 . . . . . . . . . . . . . . . . . . . . . . 4
Use of car . . . . . . . . . . . . . . . . . 11
FUTA tax . . . . . . . . . . . . . . . . . . . . 7 Small Business
Use of home . . . . . . . . . . . . . . . 10 Administration . . . . . . . . . . . . 26
H Social security tax . . . . . . . . . . . . 7
C Sole proprietorship . . . . . . . . . . . 2
Help (See Tax help)
Car and truck expenses . . . . . . . 11 Start-up costs . . . . . . . . . . . . . . . 10
Help from Small Business
Comments on publication . . . . . . 1 Suggestions for publication . . . . . 1
Administration . . . . . . . . . . . . 26
Corporation . . . . . . . . . . . . . . . . . . 3
I T
D Identification numbers . . . . . . . . . 3 Tax help . . . . . . . . . . . . . . . . . . . 24
Depositing taxes . . . . . . . . . . . . . . 8 Tax year . . . . . . . . . . . . . . . . . . . . 4
Income tax . . . . . . . . . . . . . . . 5, 7
Depreciation . . . . . . . . . . . . . . . . 10 Information returns . . . . . . . . . . . 8 Taxes:
Inventories . . . . . . . . . . . . . . . . . . 5 Employment . . . . . . . . . . . . . . . . 7
E Estimated . . . . . . . . . . . . . . . . . . 5
Employer identification number Excise . . . . . . . . . . . . . . . . . . . . . 8
L
(EIN) . . . . . . . . . . . . . . . . . . . . . . 3 How to deposit . . . . . . . . . . . . . . 8
Limited liability company . . . . . . . 3
Employment taxes: Income . . . . . . . . . . . . . . . . . . . . 5
Defined . . . . . . . . . . . . . . . . . . . . 7 Self-employment . . . . . . . . . . . . . 5
Records to keep . . . . . . . . . . . . 12 M Unemployment (FUTA) . . . . . . . . 7
Estimated tax . . . . . . . . . . . . . . . . 5 Medicare tax . . . . . . . . . . . . . . . . . 7 Taxpayer Advocate . . . . . . . . . . . 24
Excise taxes . . . . . . . . . . . . . . . . . 8 More information (See Tax help) TTY/TDD information . . . . . . . . . 24
F O U
Form: Office in home . . . . . . . . . . . . . . 10 Unemployment (FUTA) tax . . . . . . 7
1099MISC . . . . . . . . . . . . . . . . 9
11C . . . . . . . . . . . . . . . . . . . . . 8 P
1128 . . . . . . . . . . . . . . . . . . . . . . 4 Partnership . . . . . . . . . . . . . . . . . . 3
2290 . . . . . . . . . . . . . . . . . . . . . . 8
Page 27
STF PUB583F.27
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BUSINESS BASICS

Reserve the entitys name

Federal Employers Identification Number

State-Employers Corporation Filing, Sales Tax Registration, Employers Withholding

City Business License

State License(s) Contractors, Beverage, Tobacco, Tire

Federal License(s) Heavy Vehicle

Insurance Liability, Vehicle, Umbrella, Bond, Workers Compensation

Employment Commission (VEC)

Department of the Treasury

E Business address (including suite or room no.) u

5 Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0.00

7 Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 7 0.00

29 Tentative profit (loss). Subtract line 28 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 0.00

36 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

37 Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

38 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

40 Add lines 35 through 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 0.00

41 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

a Business b Commuting (see instructions) c Other

47a Do you have evidence to support your deduction? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

b If Yes, is the evidence written? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

48 Total other expenses. Enter here and on page 1, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Part I Election To Expense Certain Property Under Section 179

7 Listed property. Enter the amount from line 29 . . . . . . . . . . . . . . . . . . . . . . . 7

43 Amortization of costs that began before your 2005 tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Who Must File Schedule SE

May I Use Short Schedule SE or Must I Use Long Schedule SE?

6 Deduction for one-half of self-employment tax. Multiply line 5 by

Section BLong Schedule SE

Part I Self-Employment Tax

3 Gain, if any, from Form 4684, line 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

11 Loss, if any, from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ( )

24 Total gain. Subtract line 23 from line 20 . . . . . . . . . . . . . . . . . . 24

1a Gross receipts or sales b Less returns and allowances c Bal u 1c 0.00

12 Compensation of officers (Schedule E, line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 Dividends from less-than-20%-owned domestic corporations (other than

4 Dividends on certain preferred stock of less-than-20%-owned public utilities . . . . . 42

Department of the Treasury

2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

c Other net rental income (loss). Subtract line 3b from line 3a . . . . . . . . . . . . . . . . . . . . . . 3c

11 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Low-income housing credit (other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13b

e Listed categories (attach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14e

b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15b

c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15c

16a Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16a

b Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16b

c Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16c

17a Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17a

Assets (a) (b) (c) (d)

1 Balance at beginning of tax year . . . . . . . . .

Shareholders Share of Income, Deductions, 3 Other net rental income (loss)

7 Net short-term capital gain (loss)

8b Collectibles (28%) gain (loss)

H Shareholders percentage of stock

11 Section 179 deduction 16 Items affecting shareholder basis

* See attached statement for additional information.

Department of the Treasury

1 a Gross receipts or sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0.00

3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0.00