Paul E. Hathaway and Brenda J. Hathaway - Page 14

                                       - 14 -                                         
               Hathaway was an independent contractor in 1989 and 1990.               
               Hathaway’s status as either an independent contractor,                 
          statutory employee, or common law employee determines whether               
          petitioners properly deducted all of Hathaway’s trade or business           
          expenses “above the line” (sec. 62(a)(1)5, as in petitioners’               

          5    Sec. 62(a) provides, in pertinent part, as follows:                    
               SEC. 62.  ADJUSTED GROSS INCOME DEFINED.                               
                    (a) General Rule.--For purposes of this subtitle                  
               [subtitle A, income taxes], the term "adjusted gross income"           
               means, in the case of an individual, gross income minus the            
               following deductions:                                                  
                         (1) Trade and business deductions.--The deductions           
                    allowed by this chapter * * * which are attributable to           
                    a trade or business carried on by the taxpayer, if such           
                    trade or business does not consist of the performance             
                    of services by the taxpayer as an employee.                       
                         (2) Certain trade or business deductions of                  
                              (A) Reimbursed expenses of employees.--The              
                         deductions allowed by part VI (section 161 and               
                         following) which consist of expenses paid or                 
                         incurred by the taxpayer, in connection with the             
                         performance by him of services as an employee,               
                         under a reimbursement or other expense allowance             
                         arrangement with his employer.  The fact that the            
                         reimbursement may be provided by a third party               
                         shall not be determinative of whether or not the             
                         preceding sentence applies.                                  
                              (B) Certain expenses of performing artists.--           
                         The deductions allowed by section 162 which                  
                         consist of expenses paid or incurred by a                    
                         qualified performing artist in connection with the           
                         performances by him of services in the performing            
                         arts as an employee.                                         

Page:  Previous  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next

Last modified: May 25, 2011