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tax returns for 1999, 2000, and 2001. We disagree. Petitioners
offered no evidence substantiating Western’s losses.
5. Conclusion
Petitioners may not deduct any losses from Western in 1999,
2000, and 2001.
B. Whether Petitioners Are Liable for Self-Employment Tax for
2001 on Income From Their Accounting and Real Estate
Activities
1. Contentions of the Parties and Background
Petitioners contend that they are not liable for self-
employment tax for 2001 because they performed services as
employees of their respective corporations in 2001. Respondent
contends that petitioners improperly assigned their personal
service income to their S corporations in 2001 and thus the
income at issue was petitioners’ income from self-employment in
2001.
The tax on income from self-employment is imposed on net
earnings of $400 or more derived by an individual from a trade or
business. Sec. 1402(a) and (b); sec. 1.1401-1(c), Income Tax
Regs.; see also Parrish v. Commissioner, T.C. Memo. 1997-474,
affd. 168 F.3d 1098 (8th Cir. 1999). The performance of services
as an employee is generally not subject to self-employment tax.
Sec. 1402(c)(2) and (3).
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