your name, address, ssn and date
Dear Sir or Madam,
I am disputing your assessment of the self-employment tax you assessed on the royalties reported on my 1040 schedule 1 line 8
Under IRC code section 1402
(a)Net earnings from self-employment
The term “net earnings from self-employment” means the gross income derived by an individual from any trade or business carried on by such individual,
under IRC REG § 1.1402(a)-1 Definition of net earnings from self-employment.
(a) Subject to the special rules set forth in §§ 1.1402(a)-3 to 1.1402(a)-17, inclusive, and to the exclusions set forth in §§ 1.1402(c)-2 to 1.1402(c)-7, inclusive, the term “net earnings from self-employment” means:
(1) The gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by chapter 1 of the Code which are attributable to such trade or business,
since the term " trade or business" is not defined in the IRC this is from your webpage (in part)
hthttps://www.irs.gov/charities-non-profits/trade-or-business-definedtps://www.irs.gov/charities-non...
The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services.
I receive the royalties reported on my 1040 as an heir from books written by my grandparents. I perform no services and provide no goods to receive these royalties. therefore, I am not engaged in a trade or business with regard to these royalties and therefore they do not meet the definition of self-employment income as set forth in IRC code section 1402 and the related regulations as stated above
Please adjust your records accordingly to remove the self-employment tax you are assessing
include the above in a letter that you sign and date under penalties of perjury.
i would change the description in future returns to "royalties received as heir"
include the letter and IRS notice in your response.
send by a method where you can track that the IRS received it. keep copies for your records.
you should receive a response from the IRS. how long it will take is unknown.
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