Orneal and Martha Kooyers, et al. - Page 37

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          repairs, $279 for taxes, $1,991 for utilities, and $3,675 for               
          depreciation related to rental real estate.                                 
               Although some of those expenses might represent otherwise              
          deductible expenses, petitioners have not substantiated the                 
          amount or purpose of any of the items claimed by the OMK trusts             
          on the trusts’ Forms 1041.  Consequently, we conclude that                  
          petitioners are entitled to deduct only those items allowed in              
          the notice of deficiency.  The total of itemized deductions                 
          allowed is computational, dependent on the adjustments to income,           
          and will be determined in the Rule 155 computation.                         
          V.   Petitioners Are Liable for Self-Employment Taxes on                    
               Compensation Paid to the OMK Trusts by P.I. Ministries                 
               Respondent determined that amounts paid to the trust for               
          petitioners’ services are subject to self-employment tax.                   
          Section 1401(a) imposes the tax upon “the self-employment income            
          of every individual”.  The term “self-employment income” is                 
          defined as “net earnings from self employment”.  Sec. 1402(b).              
          Such earnings include “the gross income derived by an individual            
          from any trade or business carried on by such individual, less              
          the deductions allowed by this subtitle”.  Sec. 1402(a).  We find           
          that Mr. Kooyers was engaged in a trade or business as assistant            
          to the chief executive officer and Mrs. Kooyers was engaged as a            
          missionary and that the income they derived pursuant to the                 
          contract for services between the OMK Company Trust and P.I.                
          Ministries is subject to self-employment tax.                               





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