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mathematical errors (using petitioner’s method of computing the
self-employment tax) as follows:
1 Net farm profit from Schedule F --
2 Net profit from Schedule C $43,557.62
3 Combine lines 1 and 2 43,557.62
4a Multiply line 3 by 0.9235 40,225.00
4b --
4c Combine lines 4a and 4b 40,225.00
5b --
6 Net earning from self-employment 40,225.00
(combine lines 4c and 5b)
7 Maximum amount of combined wages and
self-employment earnings subject to
social security tax for 2000 76,200.00
8a Total social security wages and tips --
8b Unreported tips --
8c Add lines 8a and 8b 43,557.00
9 Subtract line 8c from line 7 32,643.00
10 Multiply the smaller of line 6 or
line 9 by 0.124 4,047.73
11 Multiply line 6 by 0.029 1,166.53
12 Self-employment tax. Add lines 10 and 11. 5,214.26
In computing petitioner’s self-employment tax, respondent
erroneously subtracted $43,558 (petitioner’s Schedule C net
profit which petitioner reported on line 7 of Form 1040A as
wages, salaries, and tips) from $76,200 (the maximum amount of
combined wages and self-employment earning subject to Social
Security tax for 2000). Petitioner had no employment income
other than Schedule C income.
Petitioner had a net profit of $43,558 in 2000 as reflected
on Schedule C attached to his 2000 return. Thus, for purposes of
computing his self-employment tax, petitioner had net earnings
from self-employment of $40,225; i.e., 92.35 percent of his
Schedule C net profit ($43,558 x 0.9235). Petitioner’s correct
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