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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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