During the year, Eleanor earns $120,000 in wages as an employee of an accounting firm. She also earns $30,000 in gross income from an outside consulting service she operates. Deductible expenses paid in connection with the consulting service amount to $6,000. Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment. She must pay a self-employment tax on:

a. $145,000

b. $144,000.

c. $31,000.

d. $30,000.

e. $24,000.

Question

Business

Paloma Michael

30 August, 21:13

During the year, Eleanor earns $120,000 in wages as an employee of an accounting firm. She also earns $30,000 in gross income from an outside consulting service she operates. Deductible expenses paid in connection with the consulting service amount to $6,000. Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment. She must pay a self-employment tax on:

a. $145,000

b. $144,000.

c. $31,000.

d. $30,000.

e. $24,000.

+4

Answers (1)

Know the Answer?

Lewis Mcfarland · Answer 1

Self employment tax will be $24000

So option (e) will be correct option

Explanation:

We have given that earning from outside consulting service = $30000

Deductible amount paid in connection with consulting service = $6000

We have to find the self employment tax

Self employment tax is the difference of earning from outside source and deductible amount

So self employment tax = $30000 - $6000 = $24000

So option (e) will be correct option