Aric Manley Allman - Page 9

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          3.  Self-Employment Tax                                                     
               Section 1401 imposes a percentage tax on self-employment               
          income of every individual.  See Jackson v. Commissioner, 108               
          T.C. 130 (1997).  Self-employment income is defined as “the net             
          earnings from self-employment derived by an individual * * *                
          during any taxable year”.  Sec. 1402(b).  The term “net earnings            
          from self-employment” is defined as “the gross income derived by            
          an individual from any trade or business carried on by such                 
          individual, less the deductions * * * which are attributable to             
          such trade or business”.  Sec. 1402(a).                                     
               For purposes of the self-employment income tax, a “trade or            
          business” has the same meaning as when used in section 162,                 
          except that it does not include the performance of service by an            
          individual as an employee.  Sec. 1402(c)(2).1  The definition of            
          an employee applicable to this case is “any individual who, under           
          the usual common law rules applicable in determining the                    
          employer-employee relationship, has the status of an employee”.             
          Sec. 3121(d)(2); see sec. 1402(d).                                          

               1 See also sec. 1.1402(c)-3(a), Income Tax Regs., which                
          provides as follows: “the performance of service by an individual           
          as an employee, as defined in the Federal Insurance Contributions           
          Act (chapter 21 of the Internal Revenue Code) does not constitute           
          a trade or business within the meaning of sec. 1402(c) and sec.             

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