James E. Anderson and Cheryl J. Latos - Page 42

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          Echazabal, supra at 81; United States v. City of New York, supra            
          at 98.                                                                      
          3.  Application of Section 3121(b)(20) in Light of Our                      
          Interpretation of the Statute and the Regulation                            
               We hold petitioner was self-employed under section                     
          3121(b)(20) when he worked as a captain or crew member of the               
          fishing boats in 1997.                                                      
               Petitioner was self-employed in his capacity as a crew                 
          member because as a crew member he received a share of 50 percent           
          of the proceeds from the catch.  Petitioner was self-employed in            
          his capacity as captain because he received a crew member’s share           
          and a percentage of the 50-percent of proceeds allocated to the             
          boat owner and captain.                                                     
               Even though petitioner was self-employed in 1997,                      
          petitioners failed to report or pay self-employment tax for                 
          petitioner’s fishing activities as required by section 1401.                
               In the statutory notice, respondent correctly reclassified             
          $2,031 (40 percent of $5,077) of petitioners’ claimed health                
          insurance premiums as business expenses reportable on Schedule C,           
          see sec. 162(l), and all $4,438 of petitioners’ unreimbursed                
          employee business expenses as business expenses reportable on               
          Schedule C, see sec. 162(a).                                                
               We hold petitioners are liable under section 1401 for the              
          self-employment tax liability in the amount determined by                   







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