- 42 - 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 byPage: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Next
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