Schedule C Transaction Classifier

This skill is the content layer for US Schedule C transaction classification. It supplies the rules: the deterministic vendor table, the conservative-default table for ambiguous cases, and the refusal catalog for out-of-scope situations. It must be loaded alongside

tax-workflow-base

, which supplies the three-state contract (clean / default-with-flag / refuse), the citation discipline, the structured-question form, and the reviewer-attention output specification.

If the base is not loaded, refuse to proceed and tell the user: "This skill provides Schedule C rules but not the workflow. Please load

tax-workflow-base

alongside it, then ask your question again."

Scope

Field	Value
Jurisdiction	United States, federal only
Form	Schedule C (Form 1040), Profit or Loss From Business
Taxpayer type	Sole proprietor or single-member LLC disregarded for federal tax
Tax year	2025
Currency	USD only
Currency date	April 2026

State income tax, multi-state apportionment, Schedule SE, QBI, retirement contributions, and quarterly estimated tax are out of scope for this skill — they are the responsibility of separate content skills not loaded here.

Tier 1 — Deterministic vendor patterns

Match by case-insensitive substring on the counterparty as it appears on the bank statement. If multiple match, use the most specific. If none match, fall through to Tier 2.

Pattern	Schedule C line	Treatment
AWS, GOOGLE WORKSPACE, MICROSOFT 365, ADOBE, SLACK, NOTION, GITHUB, FIGMA, ZOOM, DROPBOX	Line 27a	Software subscriptions
QUICKBOOKS, INTUIT *QB, XERO, FRESHBOOKS	Line 27a	Accounting software
MAILCHIMP, CONVERTKIT, HUBSPOT	Line 8	Advertising / marketing
WEWORK, REGUS, INDUSTRIOUS	Line 20b	Rent — other business property
VERIZON, AT&T, T-MOBILE, COMCAST, XFINITY	Line 25	Utilities (business % only — see Tier 2)
HARTFORD, HISCOX, NEXT INSURANCE	Line 15	Business liability insurance
FIVERR, UPWORK, TOPTAL	Line 11	Contract labor (flag for 1099-NEC if ≥$600 cumulative)
UNITED, DELTA, AMERICAN, SOUTHWEST, JETBLUE	Line 24a	Travel — airfare
MARRIOTT, HILTON, HYATT	Line 24a	Travel — lodging
HERTZ, ENTERPRISE, AVIS	Line 24a	Travel — rental car
CPA, ATTORNEY, LEGALZOOM	Line 17	Legal and professional
BUSINESS LICENSE, SECRETARY OF STATE	Line 23	Taxes and licenses
CHASE, WELLS FARGO, BANK OF AMERICA, MERCURY	Line 27a	Bank fees
STRIPE TRANSFER, PAYPAL TRANSFER, SQUARE	EXCLUDE	Payout is not revenue — see "Payment processor trap" below
NETFLIX, HULU, SPOTIFY, APPLE MUSIC	EXCLUDE	Personal — not deductible
GYM, EQUINOX, PLANET FITNESS	EXCLUDE	Personal — not deductible
GROCERY, WHOLE FOODS, TRADER JOE	EXCLUDE	Personal
HEALTH INSURANCE, BLUE CROSS, AETNA, KAISER	EXCLUDE from Schedule C	Self-employed health insurance lives on Schedule 1 line 17, not Schedule C
IRS, US TREASURY, EFTPS, FRANCHISE TAX BOARD	EXCLUDE	Personal tax obligation, not Schedule C
MORTGAGE, RENT (personal home)	EXCLUDE	Home office is handled separately via Form 8829
AMAZON (no item description)	Tier 2 — receipt review required	Default: personal (exclude)
Restaurants, STARBUCKS, DOORDASH	Tier 2 — substantiation required	Default: not deductible without §274(d) substantiation
SHELL, CHEVRON, EXXON, MOBIL (fuel)	Tier 2 — vehicle method required	Default: 0% business use, not deductible

Payment processor trap. Stripe / PayPal / Square deposits on the bank statement are net of fees, not gross revenue. Gross revenue (Line 1) and processor fees (Line 27a) must be reconciled from the processor dashboard, not the bank statement. Always note this in the reviewer brief when processor payouts appear.

Tier 2 — Conservative defaults for ambiguity

When data is missing, apply the default. Per the workflow base's three-state contract, every Tier 2 application is State B and must produce a flag, a citation, and a question.

Ambiguity	Conservative default	Citation
Unknown business-use % for vehicle	0% (no Line 9 deduction)	IRC §274(d); §280F
Unknown business-use % for home office	0% (no Line 30 / Form 8829)	IRC §280A(c)
Unknown business-use % for phone / internet	0% (no Line 25 deduction)	IRC §262; Treas. Reg. §1.262-1
Unknown whether expense is business or personal	Personal (exclude)	IRC §162(a) (ordinary and necessary)
Meal without documented business purpose	Not deductible	IRC §274(d) (substantiation)
Amazon purchase with no item description	Personal (exclude)	IRC §162(a); §6001 (recordkeeping)
Cash withdrawal	Owner draw (exclude)	IRC §162(a); §6001
Unknown whether worker is contractor or employee	Contractor (Line 11) with classification flag	Common-law test; §530 safe harbor
Capital asset acquired near OBBBA cutoff (Jan 19, 2025)	Pre-cutoff (40% bonus, not 100%)	OBBBA P.L. 119-21; IRC §168(k)
Unknown whether prior-year §179 election was made	Not made	IRC §179(b)(4); reviewer must verify from prior return

Refusal catalog

If any trigger fires, stop, output the verbatim message, recommend a credentialed professional, end the engagement.

Code	Trigger	Refusal message (verbatim)
R-PARTNERSHIP	User mentions partners, partnership agreement, Form 1065, or K-1	"This skill covers sole proprietors and single-member LLCs only. Partnerships file Form 1065. Please consult a CPA or EA experienced in partnership taxation."
R-S-CORP	User mentions S-corp election, Form 2553, Form 1120-S, or owner W-2 wages	"S-corporations file Form 1120-S, not Schedule C. This skill does not cover S-corp returns. Please consult a CPA experienced in S-corp taxation."
R-RENTAL	User mentions rental income, landlord activity, Schedule E, or Form 8825	"Rental real estate income is reported on Schedule E, not Schedule C. Please consult a CPA or EA experienced in rental property taxation."
R-CRYPTO	User mentions crypto trading, DeFi, NFTs, mining, staking, or transfers to/from a crypto exchange	"Cryptocurrency transactions involve basis tracking, wash-sale considerations, and Form 8949 reporting. Out of scope. Please consult a CPA or EA experienced in digital assets."
R-FOREIGN	User mentions foreign accounts, foreign income, FBAR, FATCA, Form 8938, or Form 2555	"Foreign income and FBAR/FATCA reporting are out of scope. Please consult a CPA or EA experienced in international tax."
R-MULTISTATE	Business activity in more than one US state	"Multi-state apportionment is out of scope. Please consult a CPA or EA experienced in multi-state taxation."
R-FARM	User mentions farming, Schedule F, crop or livestock income	"Farm income is reported on Schedule F. Out of scope. Please consult an agricultural tax specialist."
R-AUDIT	User mentions an open IRS notice, audit, or unfiled prior-year return	"Open IRS matters require personalised representation. Please consult a CPA, EA, or tax attorney directly."

Schedule C output lines targeted

This skill classifies into the following Schedule C Part II lines: 8 (Advertising), 9 (Car and truck), 11 (Contract labor), 13 (Depreciation), 15 (Insurance), 17 (Legal and professional), 18 (Office expense), 20a/20b (Rent), 21 (Repairs), 22 (Supplies), 23 (Taxes and licenses), 24a (Travel), 24b (Meals at 50%), 25 (Utilities), 26 (Wages), 27a (Other expenses — includes software, bank fees, merchant processing). Line 1 (Gross receipts) and Line 30 (Home office, via Form 8829) are noted but their computation is out of scope for this skill.

Limitations

This skill is a classification aid for review by a human professional credentialed under Treasury Department Circular 230 (Enrolled Agent, CPA, or attorney). It does not file returns. It does not compute Schedule C totals, Schedule SE, the QBI deduction, retirement contributions, self-employed health insurance, or quarterly estimated tax. Tax law referenced is current as of April 2026.

Disclaimer of liability

This skill is provided "AS IS", without warranty of any kind, express or implied, including but not limited to the warranties of merchantability, fitness for a particular purpose, accuracy, completeness, currency, or non-infringement. The skill does not constitute tax, legal, accounting, financial, or any other form of professional advice and does not establish any professional relationship between any party.

The authors, contributors, distributors, and any party referenced by this skill assume no liability whatsoever for any direct, indirect, incidental, consequential, special, exemplary, or punitive damages arising from the use of, or inability to use, this skill or any output it produces — including but not limited to: incorrect classifications, missed deductions, incorrect tax positions, IRS penalties, interest, audit costs, professional fees, or any other loss.

The user assumes all risk associated with using this skill and any output it produces. Every output must be independently reviewed and signed off by a qualified human professional credentialed under Treasury Department Circular 230 (Enrolled Agent, CPA, or attorney) before any reliance, filing, or communication with the Internal Revenue Service or any other taxing authority. The reviewing professional, not this skill, is responsible for the final tax positions and the accuracy of any return filed. Use of this skill constitutes acceptance of these terms.