Mortimer Z. Landsberg, Proprietor - Page 3




                                        - 3 -                                         
               In the notice of deficiency, respondent determined that                
          petitioner understated his self-employment tax liability.                   
          According to the explanation contained in the notice of                     
          deficiency, “in a community property State, where self-employment           
          income is earned by the husband, unless the wife exercises                  
          substantially all of the management and control of the trade or             
          business, all of the income will be treated as the income of the            
          husband for self-employment tax purposes.”                                  
          Discussion                                                                  
               The parties agree that because of California’s community               
          property laws, for purposes of the tax imposed pursuant to                  
          section 1,3 petitioner properly reported items of income and                
          deductions attributable to his sole proprietorship on the                   
          Schedule C included with his 1995 return.  They disagree,                   
          however, as to the consequences of the community property laws on           
          petitioner’s self-employment tax liability.  According to                   
          petitioner, California’s community property laws must be taken              
          into account not only in determining his section 1 tax liability,           
          but also in determining his liability for the self-employment tax           
          imposed by section 1401.                                                    
               In addition to other taxes, an individual's self-employment            
          income is subject to a self-employment tax.  See sec. 1401.                 



               3 Unless otherwise indicated, section references are to the            
          Internal Revenue Code of 1986, in effect for 1995.                          





Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011