Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21.

Also use Schedule C to report (a) wages and expenses you had as a statutory employee, (b) income and deductions of certain qualified joint ventures, and (c) certain income shown on Form 1099-K, Merchant Card and Third Party Network Payments, and Form 1099-MISC, Miscellaneous Income. See the instructions for line 1 and the Instructions for Recipient (back of Copy B of Form 1099-MISC) for the types of income to report on Schedule C.

Small businesses and statutory employees with business expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule C. See Schedule C-EZ for details.

You may be subject to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more information.

For the latest information about this form, including any developments after these instructions were released, go to www.irs.gov/schedulec.

We added new lines 1a and 1b to implement reporting of gross receipts received via merchant card (credit and debit cards) and third party network payments. However, for 2011, the IRS has deferred the requirement to report these amounts. Therefore, enter zero on line 1a and report all gross receipts on line 1b, including any income reported to you on Form 1099-K, Merchant Card and Third Party Network Payments (but excluding any W-2 income reportable on line 1c).

Beginning in 2011, qualified joint ventures reporting rental real estate income that is not subject to self-employment tax must report that income on Schedule E instead of Schedule C. See Husband-Wife Qualified Joint Venture and the Instructions for Schedule E for details.

The business standard mileage rate for 2011 increased to 51 cents per mile for miles driven before July 1, 2011, and 55.5 cents per mile for miles driven after June 30, 2011. See the instructions for line 9 for details.

New lines I and J address your required filing of Forms 1099 in 2011. See the General Instructions for Certain Information Returns to determine whether you are required to file any Forms 1099.

This tax has been extended through September 30, 2012. See Form 2290 and its instructions for the extended filing deadline for 2011.

You may no longer elect to amortize certain expenses paid or incurred to create or acquire a musical composition or its copyright.