Ms. Shili is a shareholder in a subchapter S corporation. In 2013, she was emplo

Question

Ms. Shili is a shareholder in a subchapter S corporation. In 2013, she was employed by the corporation and earned $75,000 in salary. She also recieved a K-1 from the corporation which showed her share of ordinary business income: 28,000, and net long term capital gain: 5,000. How much of this income is subject to the self emplyment tax?

Only the $75,000 salary

only the $28,000 ordinary business income

both the $75,000 salary and the $28,000 ordinary business income

none of the above

Only the $75,000 salary

only the $28,000 ordinary business income

both the $75,000 salary and the $28,000 ordinary business income

none of the above

Explanation / Answer

its fourth option....None of the above.

Since the question specifically asks for income under self employment tax, no income will come under self employment tax. However as employee, the salary part will be taxable under normal income tax of the individual.

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