Kathy, a sole proprietor, owns and operates a grocery store. Kathys husband and her 16-year-old daughter work in the business and are paid wages. Will the husband and daughter be subject to FICA? Explain.

Describe the exposure (i.e., wage base and tax rate) that a self-employed individual has to the self-employment tax for 2019.

Describe the two additional Medicare taxes that are assessed on high-income taxpayers.

Green Corporation hires six individuals on January 4, 2019, all of whom qualify for the work opportunity credit. Three of these individuals receive wages of $8,500 during 2019, and each individual works more than 400 hours during the year. The other three individuals work 300 hours and receive wages of $5,000 during the year.

a. Calculate the amount of Greens work opportunity credit for 2019.

b. If Green pays total wages of $140,000 to its employees during the year, how much of this amount is deductible in 2019 assuming that the work opportunity credit is taken?

Tom, a calendar year taxpayer, informs you that during the year, he incurs expenditures of $40,000 that qualify for the incremental research activities credit. In addition, it is determined that his base amount for the year is $32,800.

a. Determine Toms incremental research activities credit for the year.

b. Tom is in the 24% tax bracket. Determine which approach to the research expenditures and the research activities credit (other than capitalization and subsequent amortization) would provide the greater tax benefit to Tom.