- 12 - B. Self-Employment Tax Section 1401 imposes a tax on self-employment income, defined generally as “the net earnings from self-employment derived by an individual” for old-age, survivors, and disability insurance. Sec. 1402(b). The net earnings are defined generally 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”. Sec. 1402(a). Respondent contends that petitioners are liable for self- employment taxes for the income reported on Form 1099-MISC, which represented the value of lodging provided by the Department of the Air Force. Respondent argues that the income constitutes nonemployee compensation to Mr. Abeyta because he was not an employee of the Department of the Air Force. Respondent reasons that had TRW paid for the lodging, the amount would have been characterized as wages, which would have been subject to Federal Insurance Contributions Act (FICA) and Medicare taxes, but because it was paid by the Department of the Air Force, it constitutes nonemployee compensation income reportable on Schedule C, Profit or Loss From Business, which would be subject to the self-employment tax. We disagree.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011