Problem:
James Jones is the owner of a small retail business operating as a sole proprietorship. During 2013, his business recorded recorded the following items of income and expense:
- revenue from inventory sales 147,000
- cost of goods sold 33,500
- business license tax 2,400
- rent on retail space 42,000
- supplies 15,000
- wages paid to employees 22,000
- payroll taxes 1,700
- utilities 3,600
Required:
Question 1: Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James's 2013 Form 1040
Question 2: Compute self-employment tax payable on the earnings of James's sole proprietorship by completing a 2013 Schedule SE, Form 1040
Note: Please show the work not just the answer.