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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 miscellaneous
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