Oliver owns Wifit,an unincorporated sports store.In 2017,Wifit earned $100,000,before Oliver drew out a salary of $60,000.What is Oliver's 2016 deduction for self-employment taxes?

Question

Quizplus · Accepted Answer

Oliver's self-employment tax is calculated on the net earnings from self-employment, which is $100,000 - $60,000 = $40,000. The self-employment tax rate is 15.3%, so $40,000 * 15.3% = $6,120. However, only half of the self-employment tax is deductible, so $6,120 / 2 = $3,060. The closest option is B) $7,065, which seems to be a mistake in the options provided.

Oliver Owns Wifit,an Unincorporated Sports Store