-8-
substantial portion of the compensation he received from FBO.
Respondent disallowed the claimed exclusion.
Petitioner also calculated self-employment tax on Form SE in
the amount of $6,250. Respondent concedes that petitioner is not
liable for self-employment tax if we hold that he was an employee
of FBO in 1989.
ULTIMATE FINDING OF FACT
Petitioner was an FBO employee in 1989.
OPINION
At issue is the characterization for tax purposes of
petitioner's relationship with FBO during 1989. Petitioner argues
that his relationship with FBO in 1989 was that of an independent
contractor and therefore petitioners are entitled to exclude
$70,000 of his 1989 income from FBO as "foreign earned income"
within the purview of section 911(b)(1)(B)(ii). Respondent
contends that petitioner's relationship with FBO in 1989 was that
of an employee and therefore petitioners are not entitled to the
exclusion.
Section 911 provides in relevant part:
(a) Exclusion from Gross Income.--At the election
of a qualified individual (made separately with
respect to paragraphs (1) and (2)), there shall be
excluded from the gross income of such individual,
and exempt from taxation under this subtitle, for
any taxable year--
(1) the foreign earned income of
such individual, and
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