EXAMPLE 1: Samantha, the sole proprietor of Skylark Bakery, reports the $100,000 net profit (ordinary income) from the business on Schedule C of her individual tax return. Even though she withdrew only $50,000, Samantha reports all of the $100,000 net profit from the business on form 1040, where she computes taxable income for the year. She also reports dividend income of $5,000 on Schedule B of Form 1040