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returns pertaining to this income and claimed without any basis
that Mrs. Doxtator was an elected official.
Our conclusion is different regarding petitioners' position
that Mrs. Doxtator's judicial officer compensation in 1997 and
1999 was exempt from self-employment tax. We conclude that a
taxpayer in petitioners' circumstances could have believed in
good faith that Mrs. Doxtator's duties as a judicial officer for
the Oneida Tribe were sufficiently similar to "the performance of
the functions of a public office" that she was entitled to the
exemption from self-employment tax provided in section
1402(c)(1). We note that this exemption does not depend upon the
public office's elective or appointive status. We therefore
conclude that petitioners had reasonable cause with respect to
that portion of the underpayment in 1997 and 1999 attributable to
their failure to treat Mrs. Doxtator's judicial officer
compensation as subject to self-employment tax.
We do not find reasonable cause for any other positions
taken on the 1997 and 1999 returns. Regarding Native American
Finance, petitioners provided no substantiation for the
deductions claimed in 1997 nor any persuasive reason for their
failure to do so, and Mr. Doxtator conceded that the amounts
claimed included expenses incurred by Mrs. Doxtator in the
performance of her judicial officer duties. Petitioners' claims
that the 1999 capital gains and dividend income were actually
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