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Hathaway was an independent contractor in 1989 and 1990.
OPINION
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
employees.--
(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.
(continued...)
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