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Mr. Dunnegan or Mrs. Dunnegan for purposes of self-employment tax
under section 1401.
Petitioners attributed 50 percent of the profit and loss
from the Schedules C for the fireworks businesses located in
Moriarty, Dennings, and Kansas City to Mrs. Dunnegan in 1993.
Respondent determined that 100 percent of the net profits and
losses from the Schedules C for the fireworks businesses was
attributable to Mr. Dunnegan for self-employment tax purposes.
Respondent argues that there is no evidence that Mrs. Dunnegan
was involved in the management of the businesses or had any
significant responsibility for the income-generating activities
of the businesses.
Section 1401(a) imposes a tax on an individual’s self-
employment income. See also sec. 1402(b). Net earnings from
self-employment is the gross income derived by an individual from
a trade or business carried on by that individual, less certain
deductions. See O’Rourke v. Commissioner, T.C. Memo. 1993-603,
affd. without published opinion 60 F.3d 834 (9th Cir. 1995). We
have previously stated:
With respect to individuals who are married, only the
spouse carrying on the trade or business will be
subject to the self-employment taxes. The question of
which spouse carries on the trade or business is a
question of fact to be determined on a case-by-case
basis. * * *
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