- 25 - III. Exclusions Under Section 1402 A. Introduction Section 1402 contains several provisions which exclude specified types of income from the calculation of net earnings from self-employment. Petitioners contend that the value-added payments are excludable under either section 1402(a)(3) or (2). B. Section 1402(a)(3) Section 1402(a)(3) excludes from the calculation of net earnings from self-employment any gain or loss (1) from the sale or exchange of a capital asset, or (2) from the sale, exchange, or other disposition of property if the property is neither stock in trade or other property of a kind normally includable in inventory if on hand at the close of the taxable year nor property held primarily for sale to customers in the ordinary course of the taxpayer’s trade or business. Although their argument is not entirely clear, petitioners seem to contend that, because they acquired their MCP stock for investment purposes, the corn they acquired during 1994 and 1995 and delivered to MCP for processing, marketing, and sale was a capital asset. Petitioners’ argument is confusing and erroneous, and we reject it. Petitioners did not sell their MCP stock. They sold option pool corn acquired from MCP. Petitioners’ motivation in acquiring their MCP stock has no bearing on whether the optionPage: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: May 25, 2011