Question

Rich is a cash-basis self-employed air-conditioning repairman with current year gross business receipts of $20,000. Rich's cash disbursements were as follows: Air conditioning parts $2,500 Yellow Pages listing 2,000 Estimated federal income taxes on self-employment income 1,000 Business long-distance telephone calls 400 Charitable contributions 200. What amount should Rich report as net self-employment income?

Answer 1

Answer:

$13,945

Explanation:

The gross receipts of $20,000 will be decreased by both the parts' $2,500, the marketing expense $2,000, and the telephone expense $400.

That $15,100 is a net self-employed income.

Net self-employment earnings are net self-employment earnings, lowered by the organization's share of FICA taxation (.0765) times the tax payers. net self-employment earnings.

The $15,100 should therefore be decreased by an extra $1,155 ($15,100 multiplied by $0.0765), culminating to $13,945 net self-employment earnings.