7
Self-Employment Tax
In August 1987, petitioner wife received a $15,000 fee from
an attorney. Petitioner wife (a practicing attorney) referred
Helen Pawlick to a plaintiff's personal injury attorney and
received a referral fee. Because she was employed by a personal
injury defense firm, her firm could not ethically receive such a
fee, and it was paid to her. She then paid the money to DRPC.
Petitioner concedes that income tax is due on such income for
1987, but contests respondent's determination that such income
was taxable to him for self-employment tax purposes.
Petitioners likewise contest respondent's determination of
additions to tax under sections 6651(a), 6653(a), 6653(a)(1)(A)
and (B), and 6661.
Petitioner wife alleges that she was an innocent spouse
under section 6013(e) and should not be held liable for the
deficiencies determined herein.
OPINION
Petitioner was the sole shareholder of DRPC, a subchapter S
corporation, and claimed deductions in 1987 and 1988 under
section 1366(a) to reflect losses incurred by DRPC.2 Section
2 Sec. 1366 in part provides:
(a) Determination of Shareholder's Tax Liability.--
(1) In General.--In determining the tax under this
chapter of a shareholder * * * there shall be taken
into account the shareholder's pro rata share of the
corporation's--
(continued...)
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