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deductions attributable thereto,5 constituted income from self-
employment. Respondent accordingly determined deficiencies in
petitioners' self-employment tax for the years in issue.
Respondent allowed petitioners additional deductions with respect
to the self-employment tax liability. In addition, as a
computational result of the adjustments, respondent decreased the
amount of the general business credits and earned income credits
allowed to petitioners for the years in issue.
OPINION
Section 1401 imposes a tax on the self-employment income of
every individual. Self-employment income is defined as "net
earnings from self-employment". Sec. 1402(b). The term "net
earnings from self-employment" is defined as gross income derived
by an individual from a trade or business carried on by such
individual less the deductions attributable thereto. Sec.
1402(a).
In order to be subject to the self-employment tax, income
must be derived from a trade or business carried on by an
individual. Jackson v. Commissioner, 108 T.C. 130, 134 (1997);
Newberry v. Commissioner, 76 T.C. 441, 444 (1981). There must be
a nexus between the income received and a trade or business that
5 Respondent disallowed $102 of the mortgage interest
deduction claimed by petitioners in 1992. Petitioners did not
contest this adjustment at trial or on brief. Petitioners are
deemed to have conceded this issue.
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