(Revised 01/01/04 ML2893)
Operating Loans
Operating loans for businesses are not excluded and are an asset until spent down. When the loan is commingled with other funds in a business account, the operating loan is counted as an asset.
Line of Credit
When a business has a line-of-credit, only the portion that is actually borrowed and held in an account is counted as an asset.
Excluded Vehicles
The worker must first determine if a vehicle is excluded. When a vehicle is excluded the fair market value and the equity value test are not applied.
The entire value of the following licensed vehicles are excluded if the vehicle is (the appropriate TECS codes on the VEHI screen are listed):
- Used for income producing purposes such as, but not limited to, taxi or truck. (PI)
Vehicles that have been previously used by a self-employed farmer, who is no longer farming, are excluded for one year from the date the farm self-employment was terminated. This exclusion applies only to farmers.
- Annually producing income consistent with its fair market value, even if used only on a seasonal basis or temporarily not in use. (PI)
Example:
A household owns a pickup with a fair market value of $1,500. During the summer months this vehicle is used to haul lawn-mowing equipment for a lawn service which produces $1,500 income. This vehicle is not used primarily for this purpose. This vehicle is excluded as it is producing income consistent with its fair market value.
Asset Exclusions
- Property that is annually producing income consistent with its fair market value, even if only used on a seasonal basis.
Examples:
Rental homes, vacation homes.
- Property or work related equipment that is essential to the employment or self-employment of a household member.
Examples:
Farmland, tools of a tradesman, machinery of a farmer.
- Property essential to the self-employment of a individual engaged in farming is excluded for one year from the date the individual terminates the self-employment from farming. After the one-year exclusion, property or equipment that was essential to the self-employment operation is a countable asset. This exclusion applies only to farm operations.
Exception:
Grain in the bin is not considered essential to a self-employment operation, it is a product produced by a self-employment operation. Grain in the bin becomes a countable asset 12 months after it was stored regardless of the status of a self-employment operation.
- Any money deposited into a business checking account that is being counted as income.
Exception:
Operating loans placed in a business account
- Livestock is excluded when used in a farm operation, used for food, or kept as a pet.
- Grain in storage up to one year.
- Installment contracts for the sale of land or buildings, if the contract or agreement is producing income consistent with its fair market value. This exclusion also applies to property sold under an installment contract, or held as security in exchange for a purchase price consistent with the fair market value of that property.
- Assets of self-employed individuals that have been prorated as income.
- Non-liquid asset(s) if a lien has been placed on the property as the result of taking out a business loan.
- Federal drought assistance payments made to farmers pursuant to a determination by the Secretary of Agriculture that a farm emergency exists due to a natural disaster.
Handling Excluded Funds
Excluded funds kept in a separate account, which are not commingled with non-excluded funds, remain excluded for an unlimited period of time.
The excluded assets of self-employed individuals that have been prorated as income and are commingled with non-excluded funds remain excluded for the period of time prorated.
All other excluded monies commingled with any other funds remain exempt for six months from the date they are commingled. After six months from the date of commingling, all funds in the account are counted as an asset.
Exception:
Excluded financial aid commingled with any other funds remains exempt for an unlimited period of time.
