Charles R. Harp and April B. Harp - Page 49

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                    as net earnings from self-employment derived by an individual.                                                                                         
                    The term "net earnings from self-employment" means gross income                                                                                        
                    derived by an individual from any trade or business carried on by                                                                                      
                    such individual, less the deductions allowed by the Code that are                                                                                      
                    attributable to such trade or business, plus certain items not                                                                                         
                    relevant here.  Sec. 1402(a).  The term "trade or business", for                                                                                       
                    purposes of the self-employment tax, generally has the same                                                                                            
                    meaning as it has for purposes of section 162.  Sec. 1402(c).                                                                                          
                              Petitioners contend that assuming arguendo that we were to                                                                                   
                    sustain respondent's positions that petitioners have unreported                                                                                        
                    income for 1989 and 1990 resulting from the deposits of K & H's                                                                                        
                    and Ms. Velilla's funds and for 1990 resulting from the discharge                                                                                      
                    of the outstanding balances of the Kabeiseman loans, such income                                                                                       
                    would not be subject to self-employment tax.  According to peti-                                                                                       
                    tioners, any such income does not constitute self-employment in-                                                                                       
                    come because it is not gross income derived from a trade or busi-                                                                                      
                    ness carried on by petitioner.  Since we have found that peti-                                                                                         
                    tioners do not have unreported income for 1990 resulting from the                                                                                      
                    discharge of the outstanding balances of the Kabeiseman loans, we                                                                                      
                    shall address petitioners' contention regarding respondent's de-                                                                                       
                    terminations of self-employment tax for the years at issue only                                                                                        
                    insofar as that contention relates to our findings that petition-                                                                                      
                    ers have unreported income for 1989 and 1990 resulting from the                                                                                        
                    deposits of K & H's and Ms. Velilla's funds.  Respondent does not                                                                                      
                    address that issue in her opening brief, nor does she respond to                                                                                       




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