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and did not receive Forms W-2 or Forms 1099. He testified that
he went to Stan’s Pawn Shop from time to time to oversee its
operations and did not work a specific schedule. He contends
that these facts show that he was not employed or self-employed.
We disagree.
Taxpayers who derive net earnings from self-employment of
$400 or more are liable for self-employment tax. Sec. 6017.
Self-employment income consists of the net earnings from a trade
or business carried on by an individual through a sole
proprietorship. Sec. 1.1401-1(c), Income Tax Regs.; see also
Parrish v. Commissioner, T.C. Memo. 1997-474, affd. 168 F.3d 1098
(3d Cir. 1999). Petitioner must take into account all of the
income and deductions of his sole proprietorship in computing his
1993 self-employment tax. Sec. 1402(a)(5)(A). The fact that he
received no wages from Stan’s Pawn Shop and did not work
regularly at Stan’s Pawn Shop does not affect whether he derived
income from his business because he and Stan’s Pawn Shop are not
separate legal entities for tax purposes. Jaske v. Commissioner,
supra. Thus, the net income that he derived from Stan’s Pawn
Shop is subject to self-employment tax. Sec. 1402. We conclude
that petitioner is liable for self-employment tax on the $25,218
that he reported on his 1993 tax return as net income of Stan’s
Pawn Shop in 1993.
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