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claimed a net loss in the amount of $1,378. Petitioner and his
wife each claimed an IRA deduction in the amount of $2,000.
In the notice of deficiency respondent allowed the IRA
deduction claimed by petitioner's wife but determined that
petitioner's IRA deduction for 1993 was allowable only to the
extent of $271.
OPINION
In general, a taxpayer is entitled to deduct the amount
contributed to an IRA. See sec. 219(a); sec. 1.219-1(a), Income
Tax Regs.3 The amount allowable as a deduction to the taxpayer
in any taxable year may not, however, exceed the lesser of $2,000
or an amount equal to the "compensation" includable in the
taxpayer's gross income for such taxable year. See sec.
219(b)(1).
The term "compensation" is defined in section 219(f)(1). As
pertinent here, section 219(f)(1) provides that the term
"'compensation' includes earned income (as defined in section
401(c)(2))." Section 401(c)(2) provides in pertinent part that
"the term 'earned income' means the net earnings from self-
employment (as defined in section 1402(a))." Finally, section
3 Petitioner questioned whether sec. 1.219-1, Income Tax
Regs., was in effect in 1993, the year in issue. Sec. 1.219-1,
Income Tax Regs., was promulgated by T.D. 7714, 1980-2 C.B. 83,
effective for taxable years beginning after Dec. 31, 1978. Sec.
1.219-1, Income Tax Regs., was therefore in effect in 1993.
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