Antonio R. Durando Naomiann N. Durando v. United States

Appellants are self-employed legal and business advisors who own shares in, and provide services to, several S corporations. They appeal from the district court’s grant of summary judgment against them in their income tax refund action against the United States. Their complaint alleged that the Internal Revenue Service (IRS) improperly disallowed Keogh plan deductions which they claimed in their 1985 and 1987 joint income tax returns based on their pro rata shares of pass-through income from the S corporations. Thus, the question for decision is whether S corporation pass-through income can be treated as net earnings from self-employment for Keogh plan deduction purposes. The district court, in granting summary judgment to the United States, answered the question negatively. We affirm.

I.

JURISDICTION AND STANDARD OF REVIEW

Jurisdiction in the district court was proper under 28 U.S.C. § 1346 (a)(1) and 26 U.S.C. § 7422 . This court has jurisdiction under 28 U.S.C. § 1291 . The appeal was timely filed. Fed.R.App.P. 4(a).

The issue for review, which was submitted to the district court on cross-motions for summary judgment based on stipulated facts, is a legal one subject to de…