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review the testimony, to compare statements made on direct versus
cross-examination, or to consider potential conflicts with
testimony of other witnesses (to which petitioner repeatedly
alludes). We decline to uphold the increased deficiencies.
II. Self-Employment Tax
Section 1401 imposes a tax “on the self-employment income of
every individual”. Self-employment income is defined generally
as “net earnings from self-employment”, which in turn means “the
gross income derived by an individual from any trade or business
carried on by such individual, less the deductions allowable by
this subtitle which are attributable to such trade or business”.
Sec. 1402(a) and (b). “Trade or business” as used in this
context has been construed to encompass not only legal but also
illegal business activities. See Petzoldt v. Commissioner, supra
at 668-669; Sundel v. Commissioner, T.C. Memo. 1998-78, affd.
without published opinion 201 F.3d 428 (1st Cir. 1999).
Petitioner bears the burden of proving error in respondent’s
notice of deficiency in this regard, Rule 142(a), and petitioner
has offered no evidence or argument pertaining to the self-
employment tax. Hence, to the extent that we have sustained
respondent’s determinations of unreported income, we likewise
sustain the imposition of corresponding self-employment tax
thereon.
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