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information returns8 with respect to the child; (2) paying the
child a flat amount determined at the beginning of the year that
is not based on the services actually performed; (3) a lack of
correlation between the dates and amounts of payments and the
hours allegedly worked by the child; (4) failing to maintain
adequate records of the child’s hours worked and amounts earned;
and (5) compensating the child for services which are in the
nature of routine family chores. See Denman v. Commissioner,
supra; O’Connor v. Commissioner, supra; Hable v. Commissioner,
T.C. Memo. 1984-485; Furmanski v. Commissioner, T.C. Memo.
1974-47.
There is no indication that petitioners paid employment
taxes on the $4,000 they paid Steven. Nor is there any
indication petitioners filed a Form 940, 941, or W-2. These
facts tend to negate petitioners’ contentions that the payments
7(...continued)
purposes of FUTA, employment does not include service performed
by a child under the age of 21 in the employ of his father or
mother. Sec. 3306(c)(5). Because Steven was 21 years old when
he performed services for the seamstress business, secs.
3121(b)(3)(A) and 3306(c)(5) are inapplicable.
8 The return of the Federal unemployment tax is required to
be filed on Form 940. Sec. 601.401(a)(3), Statement of
Procedural Rules. All other returns of Federal employment taxes
generally are required to be filed on Form 941. Id. In
addition, wages paid to an employee are required to be reported
on Form W-2. Sec. 1.6041-2(a)(1), Income Tax Regs.
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