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as “the net earnings from self-employment derived by an
individual * * * during any taxable year”. 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)(3)(A) excludes from net earnings from self-employment any
gain or loss from the sale or exchange of a capital asset.
Section 1402(c) provides that, in the context of self-employment
income or net earnings from self-employment, the term “trade or
business”, has the same meaning as when used in section 162
(relating to trade or business expenses).
There is no question that during the taxable year in issue
petitioner was in the trade or business of practicing law. For
example, petitioner attached to his 1998 Federal income tax
return, a Schedule C, Profit Or Loss From Business, on which he
described his business as “Legal Services”. On that Schedule C,
he reported $5,504 he received from the firm.
Nothing in the record indicates that petitioner was to
receive any payment for “goodwill”. Rather, the Closing
Statements, signed by Mr. Tolpin, and filed with the Office of
Court Administration in New York for each client, state that the
amounts paid to petitioner were paid to him as an attorney
“participating in the contingent compensation”.
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Last modified: May 25, 2011