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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.

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Answers (1)
  1. 30 August, 22:22
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    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
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