Wayne E. and Ann L. Burk - Page 4

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          allowable deduction for any taxable year to the lesser of $2,000            
          or “an amount equal to the compensation includible in the                   
          individual’s gross income for such taxable year.”  Section                  
          219(f)(2) provides that, in the case of married individuals, “the           
          maximum deduction under subsection (b) shall be computed                    
          separately for each individual”.                                            
               Section 219(f)(1) includes in compensation, earned income as           
          defined in section 401(c)(2), but excludes any amount received as           
          a pension or annuity, or as deferred compensation.  Section                 
          401(c)(2) defines earned income as “the net earnings from self-             
          employment (as defined in section 1402(a))”.  Section 1402(a)               
          defines net earnings from self-employment as “the gross income              
          derived by an individual from any trade or business carried on by           
          such individual, less the deductions allowed by this subtitle               
          which are attributable to such trade or business”.  Section                 
          1402(a)(2) specifically defines compensation as excluding                   
          interest and dividends.  Miller v. Commissioner, 77 T.C. 97, 102            
               Petitioners’ income for taxable year 2000 consisted of                 
          interest income, ordinary dividends, taxable refunds, and pension           
          and annuity income, none of which is compensation as defined in             
          the Internal Revenue Code.  Sec. 219(f)(1); sec. 1.219-1(c)(1),             
          Income Tax Regs.  Moreover, petitioners reported a net loss from            
          petitioner’s sole proprietorship.  Thus, there were no net                  

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