Charles E. King - Page 8

            219(b)(1).  Compensation is defined by section 219(f) as earned                               
            income, as defined by section 401(c)(2).  As stated above,                                    
            section 401(c)(2) directs us to section 1402(a) and the                                       
            definition of "net earnings from self-employment".                                            
                  Petitioner's adjusted gross income for 1990 of $43,921.48,                              
            after adjustments for his IRA and self-employed health insurance                              
            deductions, consists of interest, dividend, and pension income.                               
            Interest and dividend income is not compensation within the                                   
            meaning of section 401(c) because, as noted, such income does not                             
            represent payment with respect to which personal services of the                              
            taxpayer are a material income-producing factor.  Likewise,                                   
            pension income is expressly excluded from the definition of                                   
            compensation by section 219(f)(1).  Because petitioner had no net                             
            earnings, and, therefore, no compensation within the meaning of                               
            section 219(f)(1), he is not entitled to deduct any portion of                                
            his IRA contribution.  We sustain respondent on this issue.                                   
                                                              Decision will be entered                    
                                                        for respondent.                                   

Page:  Previous  1  2  3  4  5  6  7  8  

Last modified: May 25, 2011