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IRS.gov Website
Instructions for Schedule C (Form 1040)
taxmap/instr/i1040sc-008.htm#TXMP63a54b6e

Line I(p4)

rule
If you made any payment in 2011 that would require you to file any Forms 1099, check the Yes box. Otherwise, check the No box.
You may have to file information returns for wages paid to employees, certain payments of fees and other non-employee compensation, interest, rents, royalties, real estate transactions, annuities, and pensions. You may also have to file an information return if you sold $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other similar basis for resale.
taxtip
On page 15 of the General Instructions for Certain Information Returns, you can find a chart showing which Forms 1099 must be filed, the amounts to report, and the due dates for the required Forms 1099.
taxmap/instr/i1040sc-008.htm#TXMP2399fc99

Part I. Income(p4)

rule
Except as otherwise provided in the Internal Revenue Code, gross income includes income from whatever source derived. In certain circumstances, however, gross income does not include extraterritorial income that is qualifying foreign trade income. Use Form 8873 to figure the extraterritorial income exclusion. Report it on Schedule C as explained in the Instructions for Form 8873.
If you were a debtor in a chapter 11 bankruptcy case during 2011, see Chapter 11 Bankruptcy Cases under Income in the instructions for Form 1040 and the Instructions for Schedule SE (Form 1040).
taxmap/instr/i1040sc-008.htm#TXMP6ecb48fb

Line 1(p4)

rule
Enter gross receipts from your trade or business. If you received merchant card and third party network payments in 2011, you should receive a Form 1099-K for those payments. These payments should have been reported to you in box 1 of Form 1099-K, Merchant Card and Third Party Network Payments. Merchant cards include, but are not limited to, Visa and MasterCard. Third party networks include, but are not limited to, PayPal and Google Checkout. For 2011, you are not required to report income received via merchant card or third party network payers, so enter zero on line 1a and report all income, regardless of how it was received, on line 1b.
taxmap/instr/i1040sc-008.htm#TXMP2917aa81
Line 1b.(p4)
rule
Enter on line 1b all gross receipts from your trade or business. Also include amounts you received in your trade or business that were properly shown on Forms 1099-MISC. If the total amounts that were reported in box 7 of Forms 1099-MISC are more than the total you are reporting on this line, attach a statement explaining the difference.
taxmap/instr/i1040sc-008.htm#TXMP5ba971f8
Line 1c.(p4)
rule
If you received a Form W-2 and the Statutory employee box in box 13 of that form was checked, report your income and expenses related to that income on Schedule C or C-EZ. Enter your statutory employee income from box 1 of Form W-2 on this line. Social security and Medicare tax should have been withheld from your earnings; as a result, you do not owe self-employment tax on these earnings. Statutory employees include full-time life insurance agents, certain agent or commission drivers and traveling salespersons, and certain homeworkers.
If you had both self-employment income and statutory employee income, you must file two Schedules C. You cannot use Schedule C-EZ or combine these amounts on a single Schedule C.
caution
Qualified joint ventures should report rental real estate income not subject to self-employment tax on Schedule E. See Husband-Wife Qualified Joint Venture, earlier, and the Instructions for Schedule E.
taxmap/instr/i1040sc-008.htm#TXMP3ac856b8
Installment sales.(p4)
rule
Generally, the installment method cannot be used to report income from the sale of (a) personal property regularly sold under the installment method, or (b) real property held for resale to customers. But the installment method can be used to report income from sales of certain residential lots and timeshares if you elect to pay interest on the tax due on that income after the year of sale. See section 453(l)(2)(B) for details. If you make this election, include the interest in the total on Form 1040, line 61. Also, enter 453(l)(3) and the amount of the interest on the dotted line to the left of line 61.
If you use the installment method, attach a schedule to your return. Show separately for 2011 and the 3 preceding years: gross sales, cost of goods sold, gross profit, percentage of gross profit to gross sales, amounts collected, and gross profit on amounts collected.
taxmap/instr/i1040sc-008.htm#TXMP4a42f887
Line 1d.(p4)
rule
Since line 1a is zero, enter on line 1d the amount from line 1b or 1c.
taxmap/instr/i1040sc-008.htm#TXMP2cc26824

Line 6(p4)

rule
Report on line 6 amounts from finance reserve income, scrap sales, bad debts you recovered, interest (such as on notes and accounts receivable), state gasoline or fuel tax refunds you received in 2011, credit for biodiesel and renewable diesel fuels claimed on line 8 of Form 8864, credit for alcohol and cellulosic biofuel fuels claimed on line 7 of Form 6478, credit for federal tax paid on fuels claimed on your 2010 Form 1040, prizes and awards related to your trade or business, and other kinds of miscellaneous business income. Include amounts you received in your trade or business as shown on Form 1099-PATR.
If the business use percentage of any listed property (defined in the instructions for line 13) dropped to 50% or less in 2011, report on this line any recapture of excess depreciation, including any section 179 expense deduction. Use Part IV of Form 4797 to figure the recapture. Also, if the business use percentage drops to 50% or less on leased listed property (other than a vehicle), include on this line any inclusion amount. See chapter 5 of Pub. 946 to figure the amount.