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November 1, 1996, in the amounts of $7,306, $26,937, $11,859, and
$6,5149, respectively, must be subtracted from respondent’s bank
deposits determination of income for 1996.
Section 1401 imposes a tax on the "self-employment income"
of every individual. Section 1402(b) defines "self-employment
income" as "net earnings from self-employment". Section 1402(a)
generally defines "net earnings from self-employment" as gross
income derived by an individual from any trade or business
carried on by such individual, less deductions allowed.
Petitioners bear the burden of proving that they are not liable
for the self-employment tax. See Rule 142(a).
On their 1993 and 1996 loan applications, petitioners
reported owning businesses, listed the same address for both
their home and businesses, and classified Mr. Yang as self-
employed. Petitioners claim that they misrepresented information
on the loan applications, that Mr. Yang has been unemployed since
1992, and that they have never owned a business. On the basis of
the evidence in the record, we do not find petitioners’ testimony
persuasive and hold that they are liable for the self-employment
tax for 1995 and 1996.
Section 6662(a) imposes a penalty equal to 20 percent of the
portion of an underpayment of tax attributable to a taxpayer’s
negligence, disregard of rules or regulations, or substantial
9Amounts are rounded to the nearest dollar.
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