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Background
Some of the facts have been stipulated and are so found.
Petitioner married Molly McGowan in 1980. They separated towards
the end of 1995 and were subsequently divorced. During 1995,
both were residents of California.
During 1995, each was the sole proprietor of a business.
Petitioner was, and is, an independent sales representative for a
company that manufactures designer plumbing fixtures. Ms.
McGowan was an interior decorator. Ms. McGowan did not
participate in any manner in petitioner’s business, nor did he in
hers.
Petitioner and Ms. McGowan filed separate Federal income tax
returns for 1995. Taking into account one-half of the income and
one-half of the deductions attributable to petitioner’s sole
proprietorship, petitioner reported net profit of $20,947 on a
Schedule C, Profit or Loss from Business, included with his 1995
return.1 On the basis of the net profit reported on the Schedule
C, on a Schedule SE, Self-Employment Tax, included with his 1995
return, petitioner reported net-earnings from self-employment of
$19,345 and a self-employment tax of $2,960.2
1 The 1995 Federal income tax return filed by Ms. McGowan
also includes a Schedule C on which one-half of the income and
one-half of the deductions attributable to petitioner’s sole
proprietorship are reported.
2 Ms. McGowan apparently did the same.
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Last modified: May 25, 2011