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self-employment tax liability. For the following reasons we
agree with respondent.
We find the absence of any reference to S corporation pass-
through items in section 1402 to be significant, and not merely a
consequence of timing. The statute has been amended 34 times
since the enactment of the S corporation provisions. None of the
amendments address pass-through items from S corporations. We
note that respondent's position on the issue here under
consideration was published 38 years ago in Rev. Rul. 59-221,
1959-1 C.B. 225, which states, in part:
it is apparent that income not resulting from
the conduct of a trade or business by an
individual or by a partnership of which he is
a member is not includible in computing the
individual's net earning from self-
employment. Amounts which must be taken into
account in computing a shareholder's income
tax by reason of the provisions of * * * [a
predecessor of section 1366] of the Code, are
not derived from a trade or business carried
on by such shareholder. Neither the election
by a corporation as to the manner in which it
will be taxed for Federal income tax purpose
nor the consent thereto by the persons who
are shareholders results in the consenting
shareholder's being engaged in carrying on
the corporation's trade or business.
Accordingly, amounts which a shareholder is
required to include in his gross income by
reason of the provisions of * * * [a
predecessor of section 1366] of the Code
should not be included in computing his net
earnings from self-employment * * *.
The revenue ruling concludes that S corporation pass-through
items do not constitute net earnings from self-employment to the
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