Gregg R. and Teresa M. Gilbert - Page 11

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          for the taxable years 2000 and 2001.  Nevertheless, the parties             
          do not agree as to whether insurance renewal payments petitioners           
          received are subject to self-employment tax.                                
               Respondent issued petitioners a notice of deficiency for               
          taxable years 2000 and 2001, in which respondent determined that            
          petitioners were liable for self-employment taxes of $2,411 and             
          $2,512 for taxable year 2000 and 2001, respectively.                        
                                     Discussion3                                      
               Section 1401 imposes a tax on self-employment income of                
          every individual for old age, survivors, disability insurance,              
          and hospital insurance.  Sec. 1401(a) and (b); Schelble v.                  
          Commissioner, 130 F.3d 1388, 1391 (10th Cir. 1997), affg. T.C.              
          Memo. 1996-269; sec. 1.1401-1(a), Income Tax Regs.  Self-                   
          employment income includes the net earnings from self-employment            
          derived by an individual during the taxable year.  Sec. 1402(b).            
          For purposes of the self-employment tax, the term “net earnings             
          from self-employment” is the gross income derived by an                     
          individual from any trade or business carried on by such                    
          individual, reduced by the deductions attributable to the trade             
          or business.  Sec. 1402(a); sec. 1.1402(a)-1, Income Tax Regs.              
          It is well established that the earnings of an insurance agent              


          3We decide the issue in this case without regard to the                     
          burden of proof.  Accordingly, we need not decide whether the               
          general rule of sec. 7491(a)(1) is applicable to the case at bar.           
          See Higbee v. Commissioner, 116 T.C. 438 (2001).                            




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