- 2 -
After a concession by petitioners, the only issue which
this Court must decide is whether petitioners are liable for
self-employment tax under section 1401 on a distribution received
from a partnership.
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in Coronado, California, at the
time they filed their petition.
In 1995, petitioners both worked in sales. Matthew Norwood
(petitioner) sold yachts. Linda Kramer was employed by Lasorda
Staff Leasing, LLC and by Designed Administrative Resources Tech.
During 1995, petitioner was also a general partner of Gallant
Medical Supply (Gallant), a partnership. Petitioner's percentage
of profit and loss sharing for Gallant was 50.95 percent.
Additionally, petitioner owned 50.95 percent of the capital of
Gallant.
Petitioner started Gallant a number of years ago. He had
worked at Gallant full time, but when the staff could operate the
business without him, petitioner stopped working there. During
1995, petitioner spent approximately 41 hours on partnership
matters. He conducted periodic walkthroughs of Gallant and was
consulted on major decisions of the firm. In 1995, petitioner
received $71,194 as his distributive share of Gallant's income.
Petitioners correctly included the $71,194 distribution as
taxable income on Schedule E, Supplemental Income and Loss, of
Page: Previous 1 2 3 4 Next
Last modified: May 25, 2011