Several years ago, Brian formed Sigma Corporation, a retail company ineligible for the U.S. production activities deduction. Sigma uses the accrual method of accounting. In 2015, the corporation reported the following items: Gross Profit $290,000. Long term captial gain $20,000. Tax exempt interest received $7,000. Salary paid to Brian $80,000. Payroll tax on Brian's salary (Sigma's share) $6,120. Depreciation $25,000 ($21,000 for E&P purposes). Other operationg expenses $89,000. Dividend distribution to Brian $60,000.

In addition to owning 100% of Sigma's stock, Brian merges Sigma's business and earns the $80,000 salary listed above. This salary is an ordinary and necessary business expense of the corporation and is reasonable in amount. The payroll tax on Brian's $80,000 salary is $12,240, $6,120 of which Sigma pays and deducts, and the other $6,120 of which Brian pays through Social Security withholding. Brian is single with no dependents and claims the standard deduction.

b) Assume instead that Brian operates Sigma as a sole proprietorship. In the current year, the business reports the same operating results as above, and Brian withdraws $140,000 in Lieu of the salary and dividend. Brian's self-employment tax is $19,408. Compute Brian's total tax liability for 2015.