​ Martin, a Single Individual, Has a Sole Proprietorship Business

question 109

Essay

​ Martin, a single individual, has a sole proprietorship business. For 2016, Martin's net income from this activity was $340,000.
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a. Given a FICA earnings limit of $118,500 for 2016, calculate and identify all of the payroll taxes Martin is subject to for 2016.​​b. Which taxes in (a), if any, may Martin deduct on his individual income tax return?​​
c. How would your answer to (a) change if Martin were instead an employee/owner of a C corporation with a salary of $340,000.​

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Definitions:

Random Variation

The unpredictable changes in data that do not follow a recognizable pattern, often due to random effects or causes.

Moving Averages

A method used in time series analysis to smooth out short-term fluctuations and highlight long-term trends by averaging data points over specific periods.

Exponential Smoothing

A method used in time series forecasting that applies decreasing weights to past observations.

3-year Moving Averages

A method to smooth out data over a three-year period to identify trends and patterns.