Question

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2017, 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

A.Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James’s 2017 Form 1040.

B. Compute self-employment tax payable on the earnings of James’s sole proprietorship by completing a 2017 Schedule SE, Form 1040.

C. Assume your answers to parts a and b are the same for 2018. Further assume that James's business is not a service business, and that it has $155,000 unadjusted basis in tangible depreciable property. Calculate James's 2018 Section 199A deduction.

Answer 1

Answer:

Consider the above given that

Taking the above information we have to find out the taxable of income

Particulars	Amount
Revenue	147000
Operating profit	113500
Less : Cost of sales	33500
Less : Business license	2400
Less: Rent of space	42000
Less : Supplies	15000
Less : Wages Paid	22000
Less : Payroll taxes	1700
Utilities	3600
Taxable income	26800

Self- Employment tax for 15.3% of the 92.35% of net profit

The profit is $118500

Self Employment Tax due = 26800*92.35/100*15.3/100

=$3786.72

The Self Employment tax is = $3786.72