James E. Anderson and Cheryl J. Latos - Page 1

                                   123 T.C. No. 12                                    


                               UNITED STATES TAX COURT                                


                JAMES E. ANDERSON AND CHERYL J. LATOS, Petitioners v.                 
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 7425-02.              Filed August 19, 2004.                


                    Sec. 3121(b)(20), I.R.C., classifies as self-                     
               employed those crew members of a fishing boat, with a                  
               crew of fewer than 10, who are compensated with a share                
               of the boat’s catch of fish or a share of the proceeds                 
               from the sale of the catch if the amounts of their                     
               shares depend on the amount of the catch.  Sec.                        
               31.3121(b)(20)-1(a), Employment Tax Regs., provides                    
               that if a crew member’s share “depends solely on the                   
               amount of the boat’s * * * catch of fish” (emphasis                    
               added), it qualifies as income from self-employment.                   
                    During 1997, P worked as a crew member or captain                 
               on fishing boats with crews of fewer than five members.                
               The fishing boat owners’ expenses for fuel, ice, and                   
               lubricating oil were subtracted from the proceeds of                   
               sale of the catches of fish to determine P’s                           
               compensatory share of the proceeds of each voyage.                     
                    On their 1997 joint Federal income tax return, Ps                 
               failed to report self-employment tax on compensation P                 





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