B, a sole proprietorship, has the following information for the taxable year: Net ordinary income before the
item below is considered $\quad\$ 30,000$
Compensation to $\mathrm { B }$, the proprietor $\quad 10,000$ B's self-employment income is
A)$40,000
B)$30,000
C)$20,000
D)$0

Question

B, a sole proprietorship, has the following information for the taxable year: Net ordinary income before the 
item below is considered $\quad\$ 30,000$ 
Compensation to $\mathrm { B }$, the proprietor $\quad 10,000$ B's self-employment income is
A)$40,000
B)$30,000
C)$20,000
D)$0

Quizplus · Accepted Answer

In a sole proprietorship, the net ordinary income is considered the self-employment income. The compensation to the proprietor is not deducted from the net income for self-employment tax purposes. Therefore, B's self-employment income is $30,000.

B, a Sole Proprietorship, Has the Following Information for the Taxable