The following information pertains to Joe Diamond, a cash-method sole proprietor for the current year:
- Gross receipts from business: $150,000
- Interest income from personal investments: $10,000
- Cost of goods sold: $80,000
- Other business operating expenses: $40,000
What amount of net earnings from self-employment would be multiplied by the applicable self-employment tax rate to compute Diamond's self-employment tax for the current year?
a. $25,410
b. $27,705
c. $30,000
d. $40,000
Answer: B
CPA Exam
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