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adjustment for taxable Social Security benefits is required.
Respondent agrees that the adjustment is computational. We have
found that Frank and Katherine understated their income for the
years in issue. Accordingly, Frank and Katherine’s income for
1985 though 1990 must be increased to include taxable Social
Security benefits which are to be computed in accordance with our
holdings in the instant cases.
F. Self-Employment Taxes
Respondent contends that Frank and Katherine’s self-
employment taxes should be increased as follows:
Year Amount
1983 $6,676
1984 8,542
1985 9,346
1986 10,332
1987 10,774
1988 11,718
1989 12,500
1990 15,698
Petitioners contend that no adjustment is required for this
issue.
Section 1401(a) imposes a tax on the self-employment of
every individual. Net earnings from self-employment means the
gross income derived by an individual from any trade or business
carried on by the individual, less allowable deductions
attributable to the trade or business, plus certain items not
relevant here. See sec. 1402(a). The term “trade or business”
for purposes of the self-employment tax generally has the same
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