 Most of this information comes from the tax guide for small business for individuals who use Schedule C Publication 334 Tax Year 2022. You could find on the IRS website, irs.gov, irs.gov. Looking at the income tax formula, we're focused online. One income, remember on the first half of the income tax formula is an essence and income statement, but just an outline. Scaffolding other forms and schedules flowing into these line items. One of those, the Schedule C, in essence, an income statement in and of itself. Income minus expenses giving us that net income that would then flow in from Schedule C to line one of income on the income tax formula. Page one of the Form 10, support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. 40, the Schedule C income would flow into the Schedule One then to line eight of page one of the Form 10, 40. We see here, here's a Schedule C, profit or loss from business, where we could say it's an essence and income statement, income minus the expenses. We're moving on with our discussion of income for business income related to the Schedule C that we talked about in a prior presentation. Now we're moving on to interest. So interest received on notes receivable that you have accepted in the ordinary course of business is business income. So notice interest and like dividends, for example, get a little bit confusing because sometimes we think of these or generally for most people, we think of interest, for example, as passive income, something we might get when we have money in the bank and we're not actively involved in that case. However, it depends on the industry that we are in and determining what kind of income or where we should be reporting that income. And for interest, interest received on notes receivable that you have accepted in the ordinary course of business is business income. So basically you might have done work, for example, you might have had like accounts receivable or notes receivable and then you might then charge interest on the receivables that you're having, a note receivable that you're having. Now that interest income that you're receiving isn't just passive income from you having money in the bank, but it's part of your business as you're dealing with clients, for example, in that case. So interest received on loans is business income if you are in the business of lending money. So now you're just not passively putting money into a bank, but your business is lending money. Uncollectible loans. If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction and you could see the bad debt deductions at a future point. So we've got situations where if people owe us money, then what happened, they might have that because we did goods and services. We provided a job, for example, or provided goods. Now they owe us money. We have receivables or an asset. And then at some future point, if we don't get paid in terms of that asset, then we have a question in terms of bad debt type of expense because basically on an accrual system, we might have recorded income at the point in time that we did the work. And if we don't actually get paid, then we didn't really earn the income. So then the question is, I should get a benefit in some way for taxes for the fact that I didn't actually get the income, which you could dive into bad debts for more discussion on that. If you're on a cash-based system, you never would have recorded the income until you actually receive the cash. But if you're in the type of business that tracks accounts receivable, you will likely be recording income at the point in time that you do the work because you're trying to track the accounts receivable. And then if they don't pay you, you end up with this bad debt situation. Now, if you have interest involved in it, in the loan that they owe you, then the interest would be accruing upward up until the point that you don't think you're gonna get paid the interest. It would be income to you as that happens. If you don't think it's gonna get paid, then you have that same kind of bad debt situation. Unstated interest, if little or no interest is charged on installment sale, you may have to treat a part of each payment as an unstated interest. So in other words, if you set up a long-term payment type of agreement, then you must be taken into case interest. Otherwise, it wouldn't make sense from an ARB's length type of transaction because we know that if you were able to receive $100 today or $100 a year from now, clearly you would want the $100 today because there's a time value of money. Even if you were guaranteed to get the $100 a year from now, you would like it today because you could put the money somewhere, you can invest it for example. So if a transaction is structured in which there's a long period of time between the payment and interest is not formatted in the structure, then it would be thought that interest is somehow imputed in there anyways, because you've got to take into consideration the time value of money. So then you've got to do some calculations to think about the payments that are being received, which portion of them are actually interest payments because there must be a portion that's related to interest payments if it was an ARMs length transaction and you're not going to get paid for a longer period of time. So once again, that would be like unstated interest within the agreement that you'd have to break out to report the interest income. So if little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. So you see unstated interest or original issue discount OID, you could take a look at publication 537 if you want to dive into that in more detail.