Question

Which of the following items may be subject to the self-employment tax?

a. A partner's distributive share of partnership income

b. Capital gains

c. Interest income

d. Dividend income

e. None of these choices are correct.

Answer 1

--The correct answer is Option 'a' A partner's distributive share of partnership income is subject to the Self - Employment Tax.

--Self employment tax is imposed on person who is not 'employed' as an employee and is earning salary. Self employed person can be:
>a proprietor of his own business
>a partner in a partnership firm or LLC
> a person who has any other business of his own.

--Hence, partneship share of profit is the income of that 'partner' subject to self employment tax.

answered by: anonymous