Gerald E. Johnson and Dorothy Johnson - Page 10

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          deductions attributable to such respective rents, are subject to            
          self-employment tax for the respective years at issue because               
          they constitute net earnings from self-employment under section             
          1402(a)(1).                                                                 
                                       OPINION                                        
               Petitioners bear the burden of proving that the determina-             
          tions in the notice that remain at issue are erroneous.11  See              
          Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).                  
               The ultimate dispute between the parties that we must                  
          resolve is whether the 1993 claimed rent, the 1994 claimed rent,            
          and the modified 1995 claimed rent, reduced by the deductions               
          attributable to such respective rents, are subject to self-                 
          employment tax because they constitute net earnings from self-              
          employment under section 1402(a)(1).                                        
               As applicable here, section 1402(a)(l) defines the term “net           
          earnings from self-employment” to mean                                      
               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 * * * except                    
               that in computing such gross income and deductions                     
               * * *--                                                                
                         (1) there shall be excluded rentals from real                

               11Sec. 7491(a) is not applicable in the instant case.  That            
          is because respondent issued the notice to petitioners on Jan.              
          22, 1998, and a fortiori the examination of the years at issue              
          would have commenced before July 23, 1998.  See Internal Revenue            
          Service Restructuring and Reform Act of 1998, Pub. L. 105-206,              
          sec. 3001(c), 112 Stat. 727.                                                





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