Joseph T. McQuatters - Page 12

                                                - 12 -                                                  
            are attributable to such trade or business".  Section 1.1402(a)-                            
            2(b), Income Tax Regs., provides that "The trade or business must                           
            be carried on by the individual, either personally, or through                              
            agents or employees."  See also S. Rept. 1669, 81st Cong., 2d                               
            Sess. (1950), 1950-2 C.B. 302, 354.  These provisions are to be                             
            broadly construed to favor treatment of income as earnings from                             
            self-employment.  Hornaday v. Commissioner, 81 T.C. 830, 834                                
            (1983).  Respondent's determination that petitioner is liable for                           
            self-employment tax is presumed to be correct, and petitioner                               
            bears the burden of proving it is erroneous.  Rule 142(a); Kasey                            
            v. Commissioner, 33 T.C. 656, 660 (1960); Ahmad v. Commissioner,                            
            T.C. Memo. 1997-85.                                                                         
                  At trial, petitioner testified that he was "self-supporting"                          
            and that he was not an employee of Masterguard.  Petitioner                                 
            offered no other evidence as to how he supported himself during                             
            1988, the year in issue.  Therefore, we hold that petitioner has                            
            not met his burden of proving that respondent's determination is                            
            incorrect and hold petitioner liable for self-employment tax on                             
            the unreported income as determined by respondent for 1988.                                 
                  Section 6651(a) imposes an addition to tax for a taxpayer's                           
            failure to file a required return on or before the specified                                
            filing date, including extensions.  The addition to tax is                                  
            inapplicable, however, if the taxpayer shows that the failure to                            
            file the return was due to reasonable cause and not willful                                 
            neglect.  Sec. 6651(a)(1).                                                                  




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011