Richard Norton is required to pay a self-employment tax based on the net profits of the farm business. He had a net profit of $105,000 from the farm business for Year 3 and $10,000 of Section 1231 gain.
Complete Section A of the Form 1040, Schedule SE, for Year 3 below by entering the appropriate values in the shaded cells. Round values to the nearest dollar. If a cell should be left empty, enter a zero (“0”).
Section A—Short Schedule SE.
1 Net farm profit or (loss) from Schedule F, line 36, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A 1 $115,000
2 Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. Ministers and members of religious orders, see page SE-1 for amounts to report on this line. See page SE-3 for other income to report 2 0
3 Combine lines 1 and 2 3 $115,000
4 Net earnings from self-employment. Multiply line 3 by 92.35%. If less than $400, do not file this schedule; you do not owe self-employment tax 4 $106,203
5 Self-employment tax. If the amount on line 4 is:
– $118,500 or less, multiply line 4 by 15.3%. Enter the result here and on Form 1040, line 56.
– More than $118,500, multiply line 4 by 2.9%. Then, add $14,694 to the result.
Enter the total here and on Form 1040, line 56.
5 $16,249
Does anyone know why the 10k 1231 gain is not included as income in schedule F? If it doesnt then what schedule does it flow to?
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