- 7 -
derived by an individual from any trade or business carried on by
such individual, less the deductions allowed by this subtitle
which are attributable to such trade or business". It is well
established that the earnings of an insurance agent who is an
independent contractor are "self-employment income" subject to
self-employment tax. Simpson v. Commissioner, 64 T.C. 974
(1975); Erickson v. Commissioner, T.C. Memo. 1992-585, affd.
without published opinion 1 F.3d 1231 (1st Cir. 1993).
In Newberry v. Commissioner, 76 T.C. 441, 444 (1981), this
Court held that, for income to be taxable as self-employment
income, "there must be a nexus between the income received and a
trade or business that is, or was, actually carried on." Under
our interpretation of the "nexus" standard, any income must arise
from some actual (whether present, past, or future) income-
producing activity of the taxpayer before such income becomes
subject to self-employment tax. Id. at 446. And section
1.1402(a)-1(c), Income Tax Regs., provides that gross income
derived from an individual's trade or business may be subject to
self-employment tax even when it is attributable in whole or in
part to services rendered in a prior taxable year. This Court
and others have repeatedly applied the "nexus" test.3
3 In her reply brief in this case, respondent has
requested that we apply a less restrictive test, the one
reflected in Rev. Rul. 91-19, 1991-1 C.B. 186, 187, under which
"the required nexus exists if it is clear that a payment would
not have been made but for an individual's conduct of a trade or
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011