*3494 Commissioner's determination of an earned income credit of a partner approved.
*671 The Commissioner notified the petitioner of a deficiency in tax for the calendar year 1924, in the amount of $422.07. In this proceeding for the redetermination of that deficiency the petitioner alleged various errors, but presented evidence to this Board in support of only one of those alleged errors, to wit, the action of the Commissioner in computing the earned income credit based upon a minimum earned income of $5,000, instead of upon $5,946.06, the amount of salary received by the petitioner from a partnership of which he was a member. All of the facts were stipulated.
FINDINGS OF FACT.
The petitioner is an individual residing at New Albany, Ind., and during the year 1924, was a member of the partnership known as the George Moser Leather Co. During that year he received at least $5,946.06 "as salary from said partnership."
In computing the petitioner's earned income credit, the Commissioner computed the same upon a minimum*3495 earned income of $5,000, which represented more than 20 per cent of the petitioner's share in the partnership profits by way of salaries or otherwise. The total tax liability of the petitioner for the year 1924, taxable at 1924 rates, before deducting any earned income credit is $346.40. The respondent has allowed an earned income credit of $10.50, and has thus determined the tax at 1924 rates to be $335.90. The petitioner's tax liability for the year 1924, at 1923 rates, is $927.65, and the total tax as determined by the respondent for the year 1924, is $1,263.55.
OPINION.
MURDOCK: The petitioner contends that the only error committed by the respondent is that in computing the earned income credit he used the amount of $5,000, whereas he should have used $5,946.06.
Section 209(a), subdivisions (1) and (3), of the Revenue Act of 1924, provide, in part, as follows:
*672 SEC. 209. (a) For the purposes of this section -
(1) The term "earned income" means wages, salaries, professional fees, and other amounts received as compensation for personal services actually rendered, out does not include that part of the compensation derived by the taxpayer for personal services*3496 rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for personal services actually rendered. In the case of a taxpayer engaged in a trade or business in which both personal services and capital are material income producing factors, a reasonable allowance as compensation for the personal services actually rendered by the taxpayer, not in excess of 20 per centum of his share of the net profits of such trade or business, shall be considered as earned income.
(3) The term "earned not income" means the excess of the amount of the earned income over the sum of the earned income deductions. If the taxpayer's net income is not more than $5,000, his entire net income shall be considered to be earned net income, and if his net income is more than $5,000, his earned net income shall not be considered to be less than $5,000. In no case shall the earned net income be considered to be more than $10,000.
So far as we know the petitioner was a taxpayer engaged in a trade or business in which both personal services and capital were material income-producing factors. *3497 In the case of a partnership, it may be truly said that the partners are themselves engaged in the business. . See also .
Judgment will be entered for the respondent.