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C. Income Distribution
Respondent determined that $8,789 deducted by Floors Trust
as an income distribution was disallowed for failure to meet the
requirements of section 651 or 661. Because we have held that
Floors Trust is disregarded for Federal income tax purposes, no
deductions for distributions of income are allowed. We
accordingly sustain respondent’s determination increasing trust
income (reportable by Harlan) in the foregoing amount.
VI. Self-Employment Tax
Respondent determined that the net income from the flooring
business constituted Harlan’s net income from self-employment,
taxable pursuant to section 1401. Petitioners offered no
evidence with respect to this issue. There is accordingly no
shift in the burden of proof to respondent under section 7491(a).
Section 1401 imposes a tax on self-employment income,
defined generally as “the net earnings from self-employment
derived by an individual”. Sec. 1402(b). The net earnings from
self-employment are, in turn, 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).
In light of the parties’ stipulation that Harlan performed
the floor installation activities for Floors Trust and that the
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