Natalia Ravelo Escandon - Page 5




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              Because respondent has conceded that petitioner is not                  
         liable for self-employment tax on her 2003 income, petitioner is             
         not entitled to the deduction provided for in section 164(f),                
         which allows an individual taxpayer to deduct one-half of his or             
         her self-employment tax liability from his or her taxable income.            
         Finally, we note that gross income includes unemployment                     
         compensation.  Sec. 85(a).                                                   
              As we have noted in other cases, it is unfortunate that                 
         petitioner’s employer classified her as an independent contractor            
         and not as an employee.  Had petitioner been classified as an                
         employee, it is possible that Mimi’s would have withheld the                 
         proper amounts of tax from petitioner’s wages, and a deficiency              
         in petitioner’s taxes might not have occurred.  See, e.g., Lucas             
         v. Commissioner, supra.  But that does not alter the fact that               
         the first principle of income taxation is that “income must be               
         taxed to him who earns it”.  Commissioner v. Culbertson, 337 U.S.            
         733, 739-740 (1949) (and cases cited therein).                               
              Petitioner was paid her wages without any reduction for                 
         withheld income tax, and petitioner has not yet fully paid the               
         tax liability on her income for 2003.  We therefore hold that                
         petitioner is liable for the deficiency in the amount respondent             
         has determined, appropriately adjusted to incorporate                        
         respondent’s above-mentioned concession.                                     








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