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Respondent determined deficiencies in petitioners' 1991 and 1992
Federal income taxes in the amounts of $3,562 and $6,159,
respectively.
The deficiencies are attributable primarily to respondent's
determinations that petitioners understated Paul B. Ding's self-
employment tax liabilities for the years in issue. The issues
for decision are: (1) Whether pass-through items from certain S
corporations are taken into account in computing Paul B. Ding's
self-employment income for each year; and (2) whether a carryover
loss from 1991 can be taken into account in computing Paul B.
Ding's self-employment income for 1992.
FINDINGS OF FACT
Some of the facts have been stipulated, and they are so
found. Petitioners filed joint Federal income tax returns for
the years 1991 and 1992. At the time the petition was filed in
this case petitioners resided in St. Louis, Missouri. References
to petitioner are to Paul B. Ding.
During the years in issue, petitioners were shareholders in,
and petitioner was president of, three corporations (the S
corporations), each of which had an election under section
1362(a) in effect for one or both years. Each corporation was
organized to take advantage of the limited liability
characteristic of that form of business. Petitioners owned 100
percent of the stock of one of the S corporations and at least 50
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