- 3 - 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 (1981). 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 netPage: Previous 1 2 3 4 5 Next
Last modified: May 25, 2011