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deductions stated above. We hold that petitioners are entitled
to claim Schedule C business expense deductions in the amount of
$39,441 for the 1995 tax year.
3. Self-Employment Tax
Section 1401 imposes a tax on the self-employment income of
every individual. The tax is a combination of the old-age,
survivors, and disability insurance tax, and the hospital
insurance tax. Sec. 1401(a) and (b). The self-employment tax is
similar to the tax employers are required to pay and withhold
from the wages of their employees under the Federal Insurance
Contribution Act (FICA tax). Both the self-employment tax and
the FICA tax provide individuals with coverage for Social
Security retirement benefits and hospital insurance benefits.
Section 1402(a) provides that, for purposes of the self-
employment tax, the term "net earnings from self-employment"
includes the gross income derived by an individual from any trade
or business carried on by the individual, less the deductions
allowed that are attributable to the trade or business. Section
1402(c) provides that the term "trade or business", when used
with reference to net earnings from self-employment, has the same
meaning as when used in section 162, with certain exceptions that
are not relevant to the instant case.
On the basis of the record, we find that petitioners were
self-employed for the 1995 tax year and hold that petitioners are
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