Question

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2018, his business recorded the following items of income and expense.

Revenue from Inventory Sales $147,000

Cost of Goods Sold 33,500

Business License Tax 2,400

Rent on Retail Space 42,000

Supplies 15,000

Wages Paid to Employees 22,000

Payroll Taxes 1,700

Utilities 3,600

B.) Compute self-employment tax payable on the earnings of James's sole proprietorship by completing a 2018 Schedule SE Form, Form 1040. You must show your work!

Answer 1

Revenue from Inventory Sales	$ 147,000.00
Cost of Goods Sold	$   33,500.00
Business License Tax	$     2,400.00
Rent on Retail Space	$   42,000.00
Supplies	$   15,000.00
Wages Paid to Employees	$   22,000.00
Payroll Taxes	$     1,700.00
Utilities	$     3,600.00
Net Profit	$   26,800.00

Calculation od Self Employment Tax
Net profit or (loss) from Schedule C	$ 26,800.00
Multiply line 3 by 92.35% (0.9235)	$ 24,749.80
Self-employment tax @15.3%	$   3,786.72
Deduction for one-half of self-employment tax.	$   1,893.36
Net Tax Payable	$   1,893.36