The requirement is to complete Richard's self-employment tax by completing Section A of Form 1040, Schedule SE. The self-employment tax is imposed on self-employment income to provide social security and Medicare benefits for self-employed individuals. Self-employment income includes an individual's net earnings from a trade or business carried on as a sole proprietor or as an independent contractor. Self-employment income excludes personal interest, dividends, rents, capital gains and losses, and gains from the disposition of business property. Here, Richard's self-employment income consists of the $105,000 net profit from his farming business carried on as a sole proprietor, but excludes the $10,000 of Sec. 1231 gain from the disposition of farm property.