- 7 - petitioner incurred in connection with the program are deductible as employee business expenses, the provisions of section 67 (2- percent floor on miscellaneous itemized deductions) and section 55 (alternative minimum tax) result in the increased deficiency now claimed by respondent. Petitioner maintains that he did not receive the meal allowances in return for services provided to Howard County as an employee, but rather as an independent contractor. According to petitioners, the income and costs attributable to the program are properly reportable, and were properly reported, on a Schedule C. As an alternative, petitioners also argue that even if the meal allowances were received by petitioner "in an employee capacity, only the net profit earned * * * constituted gross income." Although the parties paid some attention to the alternative position advanced by petitioners, almost the entire record and major portions of the briefs relate to the classification issue. In their respective briefs, the parties discussed at length the relevant factors that are usually considered in resolving such issues. Judging from the way that the issues were framed and the arguments presented, it is clear that the parties expect that the classification issue must first be resolved before petitioners correct 1991 Federal income tax liability can be determined.4 In her opening brief, respondent framed the classification issue as follows: Whether petitioner, John D. Beatty, as Sheriff of Howard County, Indiana, was an employee for purposes of I.R.C. sections 62 and 67, thereby subjecting his trade or business expenses for 1991 to the two percent floor for miscellaneousPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011