In a self-employment income calculation using a Corporate method, what must be included alongside reported earnings?

When calculating self-employment income using a Corporate method, it is essential to incorporate more than just the reported earnings (net profit) of the business. Including W-2 earnings, depreciation, and ownership percentages provides a comprehensive view of the overall income situation.

W-2 earnings reflect the salary that an owner-employee draws from the corporation, which is relevant when assessing personal income. Depreciation is a non-cash expense that impacts taxable income but can also provide insight into the financial health of the business. Ownership percentages are crucial for determining the income share attributable to an individual based on their equity in the company, particularly if there are multiple stakeholders involved.

This multifaceted approach ensures a more accurate calculation of self-employment income, which is necessary for lenders and other parties to assess financial stability and creditworthiness accurately.