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income, but, on a Schedule C, Profit or Loss From Business, they
reported petitioner’s income and expenses from Corben as follows:
Gross receipts or sales (gross income) $61,100
Expenses:
Advertising $ 3,014
Bad debts 2,010
Car and truck expenses 14,046
Insurance 1,550
Legal and professional 876
Repairs and maintenance 1,845
Supplies 2,310
Taxes and licenses 850
Travel 4,295
Meals and entertainment (net) 3,617
Utilities 810
Other expenses 7,599
(42,822)
Net profit $18,278
Petitioners did not include with their return a Schedule SE,
Self-Employment Tax, for self-employment tax that would
ordinarily be due on the $18,278 in net profit. In the notice of
deficiency, respondent determined self-employment tax on that
income and disallowed deductions for some of the claimed
expenses.
As described above, all of the gross income on petitioners’
Schedule C was the compensation petitioner received from Corben.
Petitioners contend that they are not liable for self-employment
tax on the net earnings from Corben for the reason that
petitioner was a statutory employee of Corben, a position that
respondent does not agree with, thus framing the principal issue
before the Court.
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Last modified: May 25, 2011