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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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