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The record is clear, and respondent does not dispute, that
Mr. Abeyta was an employee of TRW during the taxable year 2000.6
As stated earlier, all personnel working at the base were
required to accept lodging in Alice Springs, and that evidently
included employees of contractors working at the base. Although
it is not entirely clear from the record the manner in which TRW
accounted to the Department of the Air Force for housing provided
to TRW employees, it is plausible to infer that TRW arranged for
petitioners’ lodging as part of TRW’s status as a contractor at
the base.7 As a condition of his employment to work at the
JDSRF/JDSCS, Mr. Abeyta was required to accept the lodging
provided by TRW in Alice Springs. The nature of TRW’s status as
a contractor at the base as well as the conditions prerequisite
to Mr. Abeyta’s employment at the base do not rise to the level
6 The essence of respondent’s argument is that the value of
the lodging escaped the FICA and Medicare taxes. Respondent’s
argument appears premised on a finding that Mr. Abeyta was
somehow an independent contractor such that the lodging would be
subject to the self-employment tax. See Jackson v. Commissioner,
108 T.C. 130, 133-134 (1997) (earnings derived from work as an
independent contractor are self-employment income subject to the
self-employment tax). The evidence, however, is to the contrary.
See secs. 3101, 3121(d)(2); see also Profl. & Executive Leasing,
Inc. v. Commissioner, 89 T.C. 225, 232 (1987) (listing seven
factors considered in determining whether an individual is an
employee or an independent contractor), affd. 862 F.2d 751 (9th
Cir. 1988).
7 With respect to the lodging, the statutory notice of
deficiency states that Mr. Abeyta “is an employee of a defense
contractor in Alice Springs, Australia, and is furnished housing
by the US Air Force as part of the contract that the US
Government has with the contractor.”
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