William T. Hough and Norma Hough - Page 4

                                        - 4 -                                         
               On their 1990 and 1991 joint Federal income tax returns,               
          petitioners also claimed loss carry-forward deductions in the               
          respective amounts of $137,047 and $86,367 relating to an                   
          investment in a limited partnership.  The claimed $137,047 loss             
          carry-forward deduction for 1990 was reflected on line 18 of                
          petitioners’ 1990 joint Federal income tax return as a                      
          partnership loss.  It was not reflected as a Schedule C business            
          expense deduction.                                                          
               The claimed $86,367 loss carry-forward deduction for 1991              
          relating to the investment in the limited partnership, however,             
          was reflected on Schedule C of petitioners’ 1991 joint Federal              
          income tax return as a business expense deduction.                          
               By claiming the alleged pension plan contributions for 1990            
          and 1991 and the claimed partnership loss for 1991 as deductions            
          on Schedule C of petitioners' joint Federal income tax returns,             
          petitioners' reported self-employment income was reduced, and no            
          self-employment tax liability was reported as due on petitioners’           
          1990 and 1991 joint Federal income tax returns.                             

                                      OPINION                                         
               Generally, taxpayers are required to pay employment taxes on           
          net earnings from self-employment.  Sec. 1401(a).  Net earnings             
          from self-employment are defined in section 1402(a) as gross                
          income derived by self-employed individuals from any trade or               
          business less certain enumerated expenses.  Contributions to                





Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011