Bill Holbrook, owner of the Grand Ledge Caf, has earnings from his business (sole proprietorship) of $70,000.

Bill Holbrook, owner of the Grand Ledge Café, has earnings from his business

(sole proprietorship) of $70,000. Assume he is married and can claim himself and his spouse as exemptions. Further, assume he elects to take the standard deduction.

Required:

1. Based on the above, what is his federal income tax liability for 20X5. (Use the rates provided in this chapter and the tax forms illustrating the Schmidts’ for guidance.)

2. What amount of self-employment tax does he owe?