- 5 - community property laws, the intended and exclusive purpose of section 1402(a)(5)(A) is to prevent the application of the self- employment tax to that part of the taxpayer’s net earnings from self-employment that would otherwise exceed the contribution and benefits base as determined under section 230 of the Social Security Act. Section 1402(a)(5)(A) provides the “protection” that petitioner suggests, but it also provides support for the determination of a deficiency. See, e.g., Charlton v. Commissioner, 114 T.C. 333 (2000); Webb v. Commissioner, T.C. Memo. 1996-550; Klingler v. Commissioner, T.C. Memo. 1987-46; Heidig v. Commissioner, T.C. Memo. 1986-411; Chang v. Commissioner, T.C. Memo. 1984-259. Respondent’s brief cites only Webb v. Commissioner, supra. As in this case, the taxpayer and the taxpayer’s spouse in Webb were subject to California’s community property laws. In that case, we sustained the Commissioner’s determination that under the provisions of section 1402(a)(5)(A), all of the taxpayer’s nonemployee compensation must be taken into account in the computation of the taxpayer’s self-employment tax liability, although that same compensation was subject to the community property laws of California for purposes of computing the taxpayer’s taxable income and section 1 tax liability. Petitioner argues that we should not follow Webb for two reasons: (1) It is factually distinct, and (2) “there was noPage: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011