McGraw-Hill's Taxation of Individuals 2020 Edition
11th Edition
ISBN: 9781260432596
Author: SPILKER, Brian
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 15, Problem 57P
Dave and his friend Stewart each own 50 percent of KBS. During the year, Dave receives $75,000 compensation for services he performs for KBS during the year. He performed a significant amount of work for the entity and he was heavily involved in management decisions for the entity (he was not a passive investor in KBS). After deducting Dave’s compensation, KBS reports taxable income of $30,000. How much FICA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (ignore the .9 percent additional Medicare tax)?
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