James Jones is the owner of a small retail business operated as a sole proprietorship. During 2016, his business recorded the following items of income and expense:
Revenue from inventory sales .......................... $147,000
Cost of goods sold .......................................... 33,500
Business license tax .......................................... 2,400
Rent on retail space ......................................... 42,000
Supplies ........................................................... 15,000
Wages paid to employees ................................. 22,000
Payroll taxes ..................................................... 1,700
Utilities ....................................................... 3,600
a. Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James's 2016 Form 1040.
b. Compute self-employment tax payable on the earnings of James's sole proprietorship by completing a 2016 Schedule SE, Form 1040?