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self-employment under section 1402(a)(3).9 In the alternative,
petitioners argue on brief that the value-added payments are
dividends paid with respect to their MCP stock, which are
excludable from net earnings from self-employment under section
1402(a)(2).10
We examine the parties’ contentions below, taking into
account the burden of proof, which rests upon petitioners. Rule
142(a)(1).11 Respondent’s determinations are presumed to be
9Sec. 1402(a)(3) provides that, in computing a taxpayer’s
net earnings from self-employment,
(3) there shall be excluded any gain or
loss-–
(A) which is considered as gain or loss
from the sale or exchange of a capital asset,
* * * * * * *
(C) from the sale, exchange, involuntary
conversion, or other disposition or property
if such property is neither-–
(i) stock in trade or other
property of a kind which would properly
be includible in inventory if on hand at
the close of the taxable year, nor
(ii) property held primarily for sale to
customers in the ordinary course of the trade
or business;
10Sec. 1402(a)(2) provides that, in calculating a taxpayer’s
net earnings from self-employment, “there shall be excluded
dividends on any share of stock”.
11Sec. 7491 does not place the burden of proof on respondent
because the examination in this case began before July 22, 1998.
Internal Revenue Service Restructuring & Reform Act of 1998, Pub.
(continued...)
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