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thereunder contain any reference to S corporation pass-through
items.
Petitioners point out that the self-employment tax
provisions were enacted prior to the S corporation provisions.1
They suggest that the absence of any reference to S corporations
in section 1402 is due to the timing of the enactments of the
relevant statutes and should not be considered indicative of how
Congress intended pass-through items from S corporations to be
treated for self-employment tax purposes. According to
petitioners, in situations such as theirs, where a shareholder
actively participates in the business of an S corporation, the
pass-through items should be considered net earnings from self-
employment because, in reality, such items are derived from the
shareholder's trade or business. According to respondent, the
absence of any reference to such items renders them outside the
definition. Respondent goes on to argue that such items are not
attributable to the shareholder's trade or business, or to the
trade or business of a partnership in which the shareholder is a
partner, and therefore such items are not considered net earnings
from self-employment within the meaning of section 1402 and are
not taken into account in the computation of an individual's
1 Subch. S was added to the Internal Revenue Code by the
Technical Amendments Act of 1958, Pub. L. 85-866, 72 Stat. 1606,
subsequent to the enactment of the self-employment tax.
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