Guest Jhagan Posted May 24, 1999 Posted May 24, 1999 What is the maximum deductibe contribution for the sole proprietor for the 1996 PY? - The lan is a nonintegrated profit sharing plan effective 1995 - Contribution made on behalf of employees for 1996 is $15,000. - Self-employment tax is $10,821. - Net revenue after all deductions except employees' plan contributions and the deduction for self-employment tax is $125,000. The answer is $13,649. Need explanation. Thanks!
Dan Posted May 25, 1999 Posted May 25, 1999 If you begin with $125,000, deduct 1/2 SE Tax of 5410, then deduct $15,000 for employee contribution, and you have 104,590 on which to make 15% contribution. Since comp is net of contribution, multiply 104590 * .15/1.15 = 13642. I am not sure where 13,649 come from, assuming the amounts you provided are correct.
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now