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attributable to the trade or business, plus certain items not
relevant here. Sec. 1402(a). The term "trade or business" for
purposes of the self-employment tax generally has the same
meaning it has for purposes of section 162. Sec. 1402(c). Thus,
to be engaged in a trade or business within the meaning of
section 1402(a), an individual must be involved in an activity
with continuity and regularity, and the primary purpose for
engaging in the activity must be for income and profit.
Commissioner v. Groetzinger, 480 U.S. 23 (1987). Whether an
individual is carrying on a trade or business requires an
examination of all the facts in each case. Higgins v.
Commissioner, 312 U.S. 212, 217 (1941). 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).
Clearly Mr. Ortiz received unreported self-employment income
in 1991 and 1992 from his wholesale used car business. Having
found that the amounts were $17,390 and $49,163, respectively, it
follows that he is liable for self-employment taxes under section
1401 on those earnings. However, he is entitled to corresponding
increases in his self-employment tax deductions for 1991 and
1992. These adjustments are computational.
Issues 5 and 6. Fraud Penalties
Respondent determined that both petitioners are liable for
fraud penalties pursuant to section 6663 for the years in issues.
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