Question

During 20X1, Eleanor earns $146,000 in wages as an employee of an accounting firm. She also earns $26,000 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.

Answer 1

$20,000

Step-by-step explanation:

Calculation for self-employment tax payment

Using this formula

Self-employment tax=Gross income-Deductible expenses paid in

Let plug in the formula

Self-employment tax= $26,000-$6,000

Self-employment tax=$20,000

Therefore She must pay on self-employment tax on:$20,000