In 2016, William Wallace's sole proprietorship, Western Wear Apparel, generated $140,769 Schedule C net profit ($130,000 net earnings from self-employment). In addition, William recognized a $25,000 Section 1231 gain on a sale of land formerly used by the business as a parking lot. The business checking account earned $250 interest income.
a. Which of these income items are subject to self-employment tax?
b. Compute Williams' 2016 self-employment tax, assuming he has no other earned income.
c. Compute the total increase in William's 2016 taxable income attributable to his business.

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The Answer of In 2016, William Wallace's sole proprietorship, Western Wear Apparel, generated $140,769 Schedule C net profit ($130,000 net earnings from self-employment). In addition, William recognized a $25,000 Section 1231 gain on a sale of land formerly used by the business as a parking lot. The business checking account earned $250 interest income.
a. Which of these income items are subject to self-employment tax?
b. Compute Williams' 2016 self-employment tax, assuming he has no other earned income.
c. Compute the total increase in William's 2016 taxable income attributable to his business.

In 2016, William Wallace's Sole Proprietorship, Western Wear Apparel, Generated