- 37 - 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.Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Next
Last modified: May 25, 2011