Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Business Workout

Clarifying Taxpayers' Business Income and Expenses

Skills Warm Up: Schedule C Situations that Raise a "Red Flag"

Question 1 of 1

Which one of these items would raise a red flag when preparing a tax return with Schedule C?

Schedule C cash businesses as the only source of income on a return claiming EIC
Schedule C with little or no expenses when expenses would be expected
Schedule C taxpayers with little or no records for income and expenses
Any Schedule C income that qualifies the taxpayer for the maximum EIC
Schedule C without a Form 1099
All of the above