Intuit Academy Tax Practice Exam 2026 - Free Tax Practice Questions and Study Guide

Taxpayers report Ordinary Business Income on Schedule C, which is specifically designed for sole proprietors to report income or loss from their business activities. This form allows taxpayers to detail their income, expenses, and ultimately determine the net profit or loss from their business operations, which then flows directly to their Form 1040.

Schedule C is crucial for individuals who operate businesses as sole proprietors because it supports the comprehensive tracking of business income and deductions. This reporting structure helps ensure that all necessary income and expenses are reported accurately, providing a clear picture of the taxpayer's financial situation for the year.

Meanwhile, options such as Line 1 of Schedule K-1 and Schedule E are used for reporting income from partnerships or S corporations, which do not pertain to ordinary business income reported by sole proprietors. Form 1040, Line 1 is designated for wages, salaries, and taxable interest, not specifically for business income, which further underlines why Schedule C is the appropriate choice for reporting Ordinary Business Income.