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decide this case on the basis of the preponderance of evidence on
the record.
Self-employment income means the net earnings from self-
employment derived by an individual. Sec. 1402(b). Net earnings
from self-employment are the gross income derived by an
individual from any trade or business carried on by such
individual, less the deductions allowed which are attributable to
such trade or business. Sec. 1402(a). The term “derive”
requires “a nexus between the income received and a trade or
business that is, or was, actually carried on.” Newberry v.
Commissioner, 76 T.C. 441, 444 (1981). The trade or business
must be carried on by the individual, either personally or
through agents or employees. Sec. 1.1402(a)-2(b), Income Tax
Regs. The self-employment tax provisions are broadly construed
in favor of treating income as earnings from self-employment.
Braddock v. Commissioner, 95 T.C. 639, 644 (1990); Hornaday v.
Commissioner, 81 T.C. 830, 834 (1983); S. Rept. 1669, 81st Cong.,
2d Sess. (1950), 1950-2 C.B. 302, 354.
Petitioners contend that they do not owe self-employment tax
because Mr. Edwards had retired from the Edwards agency and thus
did not have a sufficient nexus with the agency’s income to
actually be carrying on a trade or business.
Respondent first contends that because the gross income from
the Edwards agency’s renewal commissions was greater than
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