Vincent E. & Judy Bot - Page 4




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          Mrs. Bot would have continued to do the same farming jobs even if           
          there were no Agreement.                                                    
               For all 3 years in issue, petitioners filed their Forms 1040           
          income tax returns on a married, filing jointly basis.  On their            
          Schedules E, Supplemental Income and Loss, petitioners reported             
          that Mrs. Bot received net rental income in the amounts of                  
          $17,825, $18,079 and $18,211 in 1993, 1994, and 1995,                       
          respectively.  On line 7, Wages, salaries, tips, etc., of their             
          Forms 1040, petitioners reported that Mrs. Bot received wages in            
          the amounts of $15,074, $15,165, and $15,296 for 1993, 1994, and            
          1995, respectively.  The identical amounts reported as wages were           
          deducted as labor hired on the respective Schedules F, Profit or            
          Loss From Farming, for the years in issue.  Mr. Bot failed to               
          withhold Federal income taxes, State income taxes, Federal                  
          Insurance Contribution Act taxes, and Medicare tax for all 3                
          years.                                                                      
               In the notice, respondent, inter alia, determined that the             
          real estate rental payments Mrs. Bot received from Mr. Bot during           
          the taxable years at issue are includable in Mrs. Bot's net                 
          earnings from self-employment under section 1402(a)(1), and thus            
          subject to self-employment tax.  Respondent also allowed                    
          petitioners a deduction for one-half of the self-employment taxes           
          imposed for the taxable years at issue.                                     







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