From your bookkeeping records, you prepare the following Federal 1040 Schedule C to report your sole proprietor income:
Income $100,000
Expense $ 60,000
Taxable margin $40,000
Now you receive a $5,000 1099-NEC that is already included in the $100,000 income already reported above.
You have already correctly reported your income, expense and margin but you may want to report Income as two lines, one for $95,000 and one for $5,000 as an attempt to acknowledge that you received the 1099-NEC.
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