- 39 -
Income Tax Undermines Civil Rights Law”, Tax Notes 1643
(Sept. 25, 2000).
Unfortunately for petitioner, the governing statutory
language does not allow us to disregard its plain meaning. The
problem with petitioner’s arguments and authorities is that they
derive no support from and indeed are contradicted by the
statutory and regulatory language as construed by the Tax Court.
Section 1.401-10(c)(1), Income Tax Regs., interprets “earned
income,” as used in section 401(c)(2)(A), quoted supra p. 35, and
section 1402(a). The regulation provides that an individual who
renders no personal services has no “earned income” even though
such an individual may have net earnings from self-employment
from a trade or business. Earned income includes professional
fees and other amounts received as compensation for personal
services “actually rendered” by the individual. Id.
Accordingly, if a self-employed taxpayer has not rendered
personal services in the trade or business for which a plan is
established, then the taxpayer has no earned income and is not
entitled to deduct contributions to the plan. See S. Rept. 992,
87th Cong., 1st Sess. 12 (1961), 1962-3 C.B. 303, 314 (“the
measuring rod for deductible contributions for self-employed
* * * [taxpayers] is ‘earned income’ * * *. This means that
contributions by or for a proprietor or partner may be made under
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