On which schedule are sole proprietorship income, expenses, and taxable profits reported?

Sole proprietorship income, expenses, and taxable profits are reported on Schedule C, which is part of IRS Form 1040. This schedule is specifically designed for sole proprietors to accurately reflect their business income and deductions. It allows the business owner to calculate the net profit or loss from the business, which is then included in their overall personal income tax return.

Using Schedule C, a sole proprietor can detail all revenues generated from their business activities and deduct any allowable business expenses, such as costs for supplies, equipment, and home office expenses. The net income from this schedule is then transferred to the main tax form (Form 1040) and becomes part of the individual's taxable income.

The other options refer to different types of entities or forms: IRS Form 1065 is used for partnerships, IRS Form 1120 is for corporations, and Schedule E pertains to income from rental properties and pass-through entities like partnerships and S corporations, not sole proprietorships. Thus, Schedule C is indeed the correct form for reporting sole proprietorship income and expenses.