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taxpayer’s gross income for such taxable year. Sec. 219(b)(1).
For 2002, the increased deductible amount is $3,500 if the
taxpayer was 50 or older before the close of the taxable year.
Sec. 219(b)(5)(B). Petitioner was over age 50 in 2002.
For purposes of calculating the maximum amount of an IRA
deduction, compensation is defined, in pertinent part, in section
219(f)(1) as follows:
(1) Compensation.--For purposes of this section,
the term “compensation” includes earned income (as
defined in section 401(c)(2)). The term “compensation”
does not include any amount received as a pension or
annuity and does not include any amount received as
deferred compensation. * * * For purposes of this
paragraph, section 401(c)(2) shall be applied as if the
term trade or business for purposes of section 1402
included service described in subsection (c)(6).
Compensation is further defined in section 1.219-1(c)(1),
Income Tax Regs., as follows:
(1) Compensation.--For purposes of this section,
the term “compensation” means wages, salaries,
professional fees, or other amounts derived from or
received for personal service actually rendered
(including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance
premiums, tips, and bonuses) and includes earned
income, as defined in section 401(c)(2), but does not
include amounts derived from or received as earnings or
profits from property (including, but not limited to,
interest and dividends) or amounts not includible in
gross income.
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Last modified: May 25, 2011