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net earnings from self-employment means the gross income derived
by an individual from any trade or business that he or she
carries on, reduced by allowable deductions attributable thereto.
Sec. 1402(a).
Above, we determined that petitioner had allowable
deductions of $908, reducing his income from self-employment to
$1,342. Accordingly, we hold that petitioners are liable for
self-employment tax on $1,342 of self-employment income.
Other Items
Since petitioners substantiated to respondent an additional
$7,542.84 of business expenses for the 1997 tax year, petitioners
are entitled to this additional expense as an unreimbursed
employee expense deduction on Schedule A.
At trial, petitioner testified that petitioners paid $414.27
of home mortgage interest that was not reported on their 1997
Schedule A. Further, petitioners presented documentation
substantiating the additional $414.27 of mortgage interest not
deducted on their 1997 tax return. Accordingly, petitioners are
entitled to an additional mortgage interest deduction on their
1997 Schedule A for $414.27.
Section 6651(a)(1)
Section 6651(a)(1) provides for an addition to tax of 5
percent of the tax required to be shown on the return for each
month or fraction thereof for which there is a failure to file a
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