-7-
accounts or individual retirement annuities as defined under
section 408(a) and (b). Self-employed individuals or sole
proprietors are treated as their own employers under a SEP plan.
See secs. 401(c)(4), 408(k)(7).
To prevail, as a threshold matter, petitioners must prove that
there was a plan that qualified as a SEP under section 408(k)
during 1989, and that such plan was established by Westech or
another employer. To do so, petitioners rely on petitioner’s
employment agreement with Westech, pursuant to which Westech was
obligated to establish a SEP/IRA for petitioner’s benefit and
contribute thereto an amount equal to 15 percent of petitioner’s
base salary.2
The only documents petitioners introduced to substantiate the
SEP deduction under scrutiny were petitioner’s employment agreement
with Westech and a document showing that $11,250 was deposited into
the Security Pacific National Bank account. Respondent argues that
these documents, by themselves, do not establish that a qualified
SEP was established. We agree with respondent.
Although petitioners have shown that $11,250 was deposited
into a Security Pacific National Bank account during 1989,
petitioners have not shown that Westech or any other employer
2 Under the employment agreement petitioner was to
receive a base salary of $75,000 per year. The amount that
petitioner deposited into Security Pacific National Bank account
No. 063-19555-6 in February 1989 equals 15 percent of
petitioner’s base salary (15% x $75,000 = $11,250).
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