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description of the gift; (3) the business purpose of the
expenditure or use; and (4) in the case of entertainment or
gifts, the business relationship to the taxpayer of the
recipients or persons entertained. Sec. 274(d).
On this issue, petitioners neither at trial nor on brief
offered evidence or argument directed towards the deductibility
of any of the specific expenses disallowed by respondent.
Respondent’s determinations therefore are sustained as to those
adjustments.13
In addition, respondent determined that petitioners were
liable for self-employment taxes, and entitled to corresponding
self-employment tax deductions, on business income attributed to
them from HGAMC in 1996 and 1997. Section 1401 imposes an
additional tax on the self-employment income of every individual,
both for old age, survivors, and disability insurance and for
hospital insurance. The term “self-employment income” denotes
“net earnings from self-employment”. Sec. 1402(b). “Net
earnings from self-employment”, in turn, means “the gross income
derived by an individual from any trade or business carried on by
such individual, less the deductions allowed by this subtitle
which are attributable to such trade or business”. Sec. 1402(a).
13 The Court further notes that although petitioners would
generally be entitled to deduct substantiated charitable
contributions on their personal returns in accordance with our
disregard of the trusts, all donations by HGRCT were made in
calendar year 1998 or thereafter. Petitioners are calendar year
taxpayers, and the years before the Court are 1996 and 1997.
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