-8-
employment tax reported by petitioners for 1994 should be
increased by $6,962.
Self-employment tax for a husband and wife filing a joint
return is the sum of the taxes computed on the self-employment
income of each spouse. See sec. 6017. All of the gross income
and deductions from a trade or business over which one spouse
exercises substantially all of the management and control are
attributable to that spouse. See sec. 1402(a)(5)(A). For these
purposes, “management and control” means actual management and
control even if management and control is imputed to the other
spouse under community property laws. Sec. 1.1402(a)-8(a),
Income Tax Regs.
Charlton contends that he and Hawthorne jointly operated
Medi-Task and that Medi-Task was a partnership or should be
treated as one. We disagree. Hawthorne managed Medi-Task and
performed most of its day-to-day operations. Charlton had a
full-time job until September 1994, and he also renovated cabins
in 1994. He did not devote much time to Medi-Task. We conclude
that all of the Medi-Task income in 1994 is attributable to
Hawthorne for self-employment tax purposes.
B. Whether Petitioners’ 1994 Expenses for the Cabins Were
Preoperational Startup Expenses
Charlton contends that petitioners may deduct $27,724 for
supplies, taxes, travel, utilities, legal and professional
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