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the self-employment tax for each of those years to the extent of
her net earnings from self-employment.
G. Self-Employment Deduction
For 1990, section 164(f) provides a deduction for one-half
of the taxes imposed by section 1401 for such year. Respondent
contends that petitioners are entitled to increase their self-
employment tax deduction for 1990 in the amount of $7,301.
Petitioners contend that respondent is incorrect. This item is a
computational adjustment and must be recalculated to reflect our
holding in the instant cases that Frank and Katherine understated
their 1990 income by $92,306, and that only Katherine is liable
for the self-employment tax imposed by section 1401 for that
year.
H. Married Couples Deduction
Respondent contends that Frank and Katherine are entitled to
a $3,000 married couples deduction for the years 1983 through
1986. Petitioners contends that Frank was retired for all of
those years; therefore, Frank and Katherine are not entitled to a
married couples deduction for any year in issue. We agree with
petitioners.
In the case of a joint return for 1983 through 1986, section
221 allows a deduction for two-earner married couples equal to
10 percent of the lesser of $30,000 or the “qualified earned
income” of the spouse with the lower qualified earned income for
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