self-employment tax

Project Description:

long-term contract. king construction company is engaged in a road construction contract to build a highway over a three-year period. king will receive $11,200,000 for building five miles of highway. king estimates that it will incur $10,000,000 of costsbefore the contract is completed. as of the end of the first year king incurred $3,000,000
of costs allocated to the contract.
a. how much income from the contract must king report during the first year?
b. assume king incurs an additional $5,000,000 of costs during the second year. how much income is reported during that year?
c. assume that king incurs an additional $2,500,000 of costs in the third and final year
of the contract. how much does king report during the third year?
d. will king receive or pay look-back interest? explain.
self-employment tax. in 2012 amelia has wages of $45,000 and net income from asmall unincorporated business of $70,000.
a. what is the amount of amelia’s self-employment (se) tax and deduction for agi for her se tax?
b. how would your answer to part a change if amelia’s wages were $120,000 rather than
c. in the year 2011 determine amelia’s se tax liability if she then earned wages of
$45,000 and se income of $70,000?
earned income credit. carolyn is unmarried and has one dependent child, age 6, who
lived with her for the entire year. in 2012, she has income of $12,000 in wages and
$6,000 in alimony. her agi is $18,000.
a. what is carolyn’s tentative earned income credit (before phaseout)?
b. what is carolyn’s allowable earned income credit?
c. if carolyn has no income tax liability (before the earned income credit is subtracted), is
she entitled to a refund in the current year?
d. how will your answers to parts a and b change if carolyn is married filing a joint return?
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