[Sysvr4]

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I think the SE tax liability in his case would be negligible. Someone correct me if I'm wrong... IANAL.

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Medicare is not capped. The SE tax on 12 million would be $360,000.

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You're right, it's not capped, it's the FICA part that is. That occured to me after I posted...

According to my calculations, after you consider the before AGI deduction for half the SE tax, the total cost of the SE tax is around 275k (assuming he pays tax on the full 12M. That works out to an additional 2.3% tax over his marginal rate, or a roughly 6% increase in the total tax liability itself.

Now, don't get me wrong, 275k is significant, but less so when viewed in through the following tax prism:

a) If he files the sch C he can deduct other gambling related expenses (which he couldn't do filing direct to the other income line). This one alone could easily make the difference depending on his habits.

b) If he files the sch C he can make self-employed retirement account contributions that would allow deductions for which he would otherwise be ineligible

My post was in response to filing a sch C would be the "dumbest thing he could do" statement, and I was (and am) saying that that is not necessarily the case even with the SE tax added in. As with everything else in life, "it depends".