What does Schedule C report?

Schedule C is used by sole proprietors to report income or loss from their business activities. The primary focus of this schedule is to detail the profits or losses generated from the business, which includes various income sources and deductible business expenses directly associated with running the business. It allows business owners to indicate their total revenue, subtract business expenses, and ultimately arrive at either a profit or a loss for the tax year.

In contrast, the other options relate to different tax reporting forms and contexts. For instance, gains or losses from the sale of assets are typically reported on Schedule D or Form 4797, rather than Schedule C. Income from wages and salaries would be reported on Form 1040 or the associated W-2, while capital gains and losses are also reported in the context of investment activities, specifically on Schedule D. Therefore, Schedule C specifically serves the purpose of reporting profit or loss from a business, distinguishing it clearly from other forms of income or financial activity.