Jeffrey S. Kaiser and Gail F. Kaiser - Page 7

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          her conclusion that such compensation constitutes earnings from             
          self-employment within the meaning of section 1402.                         
                                       OPINION                                        
               In addition to other taxes, section 1401 imposes a tax upon            
          an individual's self-employment income.  This tax is commonly               
          referred to as the self-employment tax.  Ignoring exceptions not            
          applicable to this case, section 1402(b) defines self-employment            
          income as net earnings from self-employment.  Disregarding                  
          irrelevant exceptions and inclusions, net earnings from self-               
          employment consist of the gross income derived by an individual             
          from any trade or business carried on by such individual, less              
          the allowable deductions that are attributable to such trade or             
          business.  Sec. 1402(a).  However, the self-employment tax                  
          generally does not apply to compensation paid to an employee by             
          an employer.  Sec. 1402(c)(2) and (3).                                      
               Petitioners contend that petitioner provided police-type               
          services to the companies as an employee of the Department, not             
          as an independent contractor.4  Consequently, according to                  
          petitioners, the compensation that petitioner received from the             
          companies is not subject to the self-employment tax.                        
          Respondent's determination to the contrary, having been made in a           
          notice of deficiency, is presumptively correct, and petitioners             

          4Petitioners have expressly taken the position that                         
          petitioner was not an employee of any of the companies during the           
          year in issue.  Respondent apparently agrees, and we do not                 
          consider this point in our opinion.                                         




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