The CAO must estimate the profit from self-employment income the household expects to receive. The estimate may be based on prior earnings only if they accurately represent the self-employment income the household expects to receive. The CAO may use income tax returns and other records to determine prior earnings. 7 CFR § 273.11(a)(1)(i)
If the household has a substantial increase or decrease in business, the CAO must not average past earnings. Instead, it must estimate the earnings the household expects to receive.
Example: A farmer’s tax return for last year showed a total income of $10,000 before expenses. The farmer recently leased a neighboring property and expects to increase his harvest by 20 percent. The CAO must estimate the farmer’s annual income before expenses to be $12,000 ($10,000 plus 20 percent).
If the household's self-employment has existed for less than a year, its income must be averaged over the period of time it has existed. The monthly amount must be projected for the coming year. 7 CFR § 273.11(a)(1)(ii)
At the end of the certification period, if actual income is different from the estimated amount, there was no overissuance or underissuance if the estimate was based on the most accurate information available at the time of the estimate.
The CAO must note in the case record the basis for arriving at the estimated income.
Reissued March 1, 2012, replacing July 13, 2004