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amended tax returns), or whether petitioners are required to
deduct substantially all of those expenses (see supra note 2)
“below the line”, as in petitioners’ initial tax returns. See
sec. 62(a)(2). More than 80 percent of the deficiencies in
dispute in the instant case results from the impact of this issue
on the calculation of the alternative minimum tax. Sec.
56(b)(1)(A)(i); see supra note 1. Substantially all the
remainder of the deficiencies results from the application of the
2-percent floor on miscellaneous itemized deductions. Sec. 67.
Unlike the usual situation in employment-status cases, respondent
does not contend, even in the alternative, that Hathaway is
subject to self-employment taxes. Sec. 1401.
Petitioners contend that Hathaway was a statutory employee
under section 3121(d)(3)(D) in 1989 and 1990, and thus, by
operation of Rev. Rul. 90-93, 1990-2 C.B. 33, petitioners
properly reflected Hathaway’s business-related income and
expenses on Schedule C in calculating adjusted gross income under
section 62(a)(1). In the alternative, petitioners contend that
Hathaway was an independent contractor in 1989 and 1990, also
entitling petitioners to use Schedule C to reflect Hathaway’s
business-related income and expenses in calculating adjusted
gross income under section 62(a)(1).
5(...continued)
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