Nonallowable Business Expenses

The following items are not allowable as self-employment expenses:

Principal Payments on real estate mortgages are not allowed (though taxes, interest, insurance and assessments are allowable).
Capital Purchases — The purchase price of capital assets, equipment, machinery and other durable goods are not allowable (though interest or finance charges paid on installment purchase of such goods are allowable).
Depreciation — No amount may be allowed for depreciation.
Net Losses — Net losses from a prior period may not be deducted from current self-employment income. Net losses may not be adjusted against any other income. However, a current specific loss, such as from fire or theft, and not reimbursed from insurance or other programs, may be deducted from current self-employment income in determining net self-employment income.
Capital Gains — Total capital gains (income from the sale of capital assets) are considered income for CalWORKs.
Unrelated Items — No deduction is allowed for any item not directly related to the self-employment operation.
Mandatory Deductions — FIT, SIT, FICA and SDI are not allowed as a deduction, against net earnings, for the self-employed person.

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