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 deductions against net earnings for the self-employed person.

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