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In a notice of deficiency respondent determined that
petitioner’s Schedule C income was subject to self-employment tax
for the 1997 tax year. Petitioner contends that he should not
have to pay self-employment tax since he will not gain any
additional benefit from paying self-employment tax while he is
receiving a military pension and Social Security benefits.
Section 1401 imposes a tax on an individual’s self-
employment income. Self-employment income is defined as “net
earnings from self-employment”. Sec. 1402(b). The term “net
earnings from self-employment” is defined as an individual’s
gross income from a trade or business carried on by such
individual less the deductions attributable to such trade or
business. Sec. 1402(a).
Petitioner reported gross receipts of $52,342.50 on his
Schedule C. He deducted total business expenses of $46,942.50
resulting in a net profit of $5,400. Respondent does not contest
the amount of petitioner’s gross receipts or expenses.
The law is clear in this case. There is no exception to the
self-employment tax provisions of the Code that will provide
petitioner relief from self-employment tax liability.
Although petitioner feels that it is “unfair” that he should
pay self-employment tax when it will not add to his individual
benefit, he is bound by the law as it is written by Congress.
The power to legislate is exclusively the power of Congress and
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Last modified: May 25, 2011