Howard E. Clendenen - Page 10

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          petitioner paid Mr. Clendenen as an independent contractor for              
          the years 1989 through 1991.  Petitioner argues that Mr.                    
          Clendenen's compensation was his earned income as a self-employed           
          person.  Petitioner is correct that for a self-employed                     
          individual, "participant's compensation" is the participant's               
          earned income.  See sec. 415(c)(3)(B).  What petitioner fails to            
          recognize is that a sole proprietor is considered to be his own             
          employer.  Sec. 401(c)(4); sec. 1.401-10(e), Income Tax Regs.               
          Mr. Clendenen, thus, had at least two employers during 1989,                
          1990, and 1991, himself and petitioner.                                     
               While an individual can be an employee with respect to more            
          than one business or employer, each employer is considered                  
          separately and only the income the employee earns from the                  
          employer sponsoring the plan may be taken into account for                  
          purposes of that employer's plan.  Sec. 415(c)(3)(A)                        
          (compensation "from the employer"); sec. 1.401-10(b), Income Tax            
          Regs.  Accordingly, section 1.415-2(d)(2)(i),8 Income Tax Regs.,            
               For purposes of applying the limitations of section                    
               415, the term "compensation" includes * * * --                         
                    (i) The employee's wages, salaries, fees for                      
               professional services, and other amounts received * * *                
               for personal services actually rendered in the course                  
               of employment with the employer maintaining the plan to                
               the extent that the amounts are includable in gross                    
               income * * * .  [Emphasis added.]                                      

               8  See supra note 5.                                                   

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