Phyllis Is an Electrician Employed by Bogie Company

question 121

Multiple Choice

Phyllis is an electrician employed by Bogie Company. Phil is a self-employed electrician. During the current year, Phyllis's salary is $75,000 and Phil's net self-employment income is $75,000. Which of the following statements about the Social Security and self-employment taxes paid is/are correct?
I.Phil's self-employment tax is greater than the Social Security tax paid on Phyllis's income.
II.Phil pays more self-employment tax than Phyllis pays in Social Security tax.
III.Phil and Phyllis pay the same amount of tax.
IV.Phil's self-employment tax is equal to the Social Security tax paid on Phyllis's income.
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• A)Only statement I is correct
• B)Only statement I is correct.
• C)Only statement IV is correct.
• D)Statements I and III are correct.
• E)Statements II and IV are correct.

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Definitions:

FDIC

Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits at commercial banks and savings institutions, providing depositor protection against bank failures.

Too-Big-To-Fail

A concept suggesting that certain corporations or institutions are so large and interconnected that their failure would be disastrous to the broader economy, often leading to government intervention.

Bank Panics

Occur when a large number of customers withdraw their deposits simultaneously, fearing the bank's insolvency.

Continental Illinois

A notable example of a major bank failure, occurred in the 1980s, which led to significant reforms in banking regulations.