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income and deductions attributable to such trade or business
shall be treated, for purposes of self-employment tax, as the
gross income and deductions of the husband, unless the wife
exercises substantially all of the management and control of such
trade or business, in which case all such gross income and
deductions shall be treated as hers. Accordingly, under section
1401, the spouse deemed to have management and control of the
business activity is subject to self-employment tax, and the tax
is computed on the total gross income less the total deductions
of the business, notwithstanding the attribution of one-half of
the income to the other spouse for income tax purposes.
It is uncontested that petitioner, d.b.a. PAINT-SER LTD.,
managed and controlled the performance of the painting services
associated with PAINT-SER LTD. On the basis of the record and
sections 1401 and 1402(a)(5), we find that all the self-
employment tax liability for the years 1989 through 1994 is
attributable to the business managed and controlled by
petitioner, and that he is liable for self-employment tax during
the years in issue on the income earned from these services.
Issue 3. Failure To File Timely Tax Return or To Pay Tax
Respondent determined that the addition to tax for failure
to file timely a tax return was applicable for each of the years
in issue. It is uncontested that petitioners did not file tax
returns for any of the years in issue. An income tax return must
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Last modified: May 25, 2011