T.C. Summary Opinion 2001-186

UNITED STATES TAX COURT

GEORGE N. SEMAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 7195-00S. Filed December 17, 2001. 

 

George N. Seman, pro se.

Richard A. Stone, for respondent.

GOLDBERG, Special Trial Judge: This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed. The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority. Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the year in issue. 

Respondent determined a deficiency in petitioner’s Federal
- 2 -

1 Petitioner concedes that he failed to include $93 of

capital gain dividends and $71 of ordinary dividends received

from the Fidelity-Equity Income Fund. 

income tax of $727 for the taxable year 1997. 

After concessions by petitioner,1 the sole issue for

decision is whether petitioner’s Schedule C, Profit or Loss from

Business, net profit is subject to self-employment tax.

Some of the facts have been stipulated and are so found. 

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. At the time of filing the

petition, petitioner resided in Brandywine, Maryland. Petitioner

was 67 years old during the year in issue. 

Since 1977, and including the year in issue, petitioner has

been in the business of operating a dump truck as an independent

contractor. In 1997, petitioner contracted his services to a

company that washed and sold sand and gravel. Payments were made

to petitioner based on the number of loads carried. 

Petitioner was also in the military for approximately 21

years. During the year in issue, petitioner was retired from

military service and was receiving a military pension and Social

Security benefits.

Petitioner timely filed his income tax return for the

taxable year 1997 reporting $5,400 in Schedule C income from his

business as an independent contractor. Petitioner also reported

taxable pensions and annuities of $11,966.40. 
- 3 -

In a notice of deficiency respondent determined that

petitioner’s Schedule C income was subject to self-employment tax

for the 1997 tax year. Petitioner contends that he should not

have to pay self-employment tax since he will not gain any

additional benefit from paying self-employment tax while he is

receiving a military pension and Social Security benefits.

Section 1401 imposes a tax on an individual’s selfemployment income. Self-employment income is defined as “net

earnings from self-employment”. Sec. 1402(b). The term “net

earnings from self-employment” is defined as an individual’s

gross income from a trade or business carried on by such

individual less the deductions attributable to such trade or

business. Sec. 1402(a). 

Petitioner reported gross receipts of $52,342.50 on his

Schedule C. He deducted total business expenses of $46,942.50

resulting in a net profit of $5,400. Respondent does not contest

the amount of petitioner’s gross receipts or expenses. 

The law is clear in this case. There is no exception to the

self-employment tax provisions of the Code that will provide

petitioner relief from self-employment tax liability. 

Although petitioner feels that it is “unfair” that he should

pay self-employment tax when it will not add to his individual

benefit, he is bound by the law as it is written by Congress. 

The power to legislate is exclusively the power of Congress and
- 4 -

not of this Court. Iselin v. United States, 270 U.S. 245, 250

(1926). 

Upon the basis of the record, we conclude that petitioner

received self-employment net earnings, and, accordingly, is

subject to self-employment tax. Respondent is sustained on this

issue.

Reviewed and adopted as the report of the Small Tax Case

Division.

Decision will be entered

for respondent.