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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.,
provides:
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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