- 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 no
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011