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Debbie is a limited partner in ADK Partnership. Her partnership Schedule K-1 reports $19,000 ordinary business income, $2,000 long-term capital gain, and $830 dividend income. Which of these items are subject to self-employment tax?
None of the items are subject to SE tax because Debbie is a limited partner.
$19,000 ordinary business income
$19,000 ordinary business income and $2,000 long-term capital gain
All income reported on a partner's Schedule K-1 are subject to self-employment tax.
None of the items are subject to SE tax because Debbie is a limited partner.

Respuesta :

None of the items are subject to Self employment tax because Debbie is a limited partner.

Thus, the correct option is D.

What is Self employment tax?

Income from self-employment is earnings from providing personal services that are not wages because there is no employer-employee relationship between the payer and the payee.

An independent contractor or sole owner who reports self-employment income is considered to be self-employed. Instead of working for an employer, self-employed individuals work for themselves in a number of trades, professions, and occupations.

Increasing your expenses linked to your business is the only surefire approach to reduce your self-employment tax.

Your net income will be decreased as a result, and your self-employment tax will also be decreased. Your self-employment tax will not be decreased by regular deductions like the standard deduction or itemized deductions.

Learn more about self employment tax, here

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