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Discussion
A. Deductibility of Contributions to Simplified Employee
Pension
A simplified employee pension is a qualified plan pursuant
to which an employer makes direct contributions to its employees’
individual retirement accounts or individual retirement annuities
as defined under section 408(a) and (b). Sec. 408(k). Section
404(a)(8) permits an employer to deduct certain contributions to
a simplified employee pension. Individuals who have net earnings
from self-employment (as defined in section 1402(a)) are treated
as their own employers under a simplified employee pension plan.
See secs. 401(c)(4), 408(k)(7). Section 1402(a) defines “net
earnings from self-employment” as the gross income derived by an
individual from any trade or business less deductions
attributable thereto. Section 1402(c)(2) provides that
performance of services as an employee does not constitute a
trade or business for purposes of self-employment income, except
for certain situations not relevant herein. See also sec.
1.401-10(b)(3)(i), Income Tax Regs. Employees include employees
and elected and appointed officials of the Federal Government, as
well as private-sector employees. Sec. 31.3401(c)-1(a),
Employment Tax Regs.
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