Paul E. Hathaway and Brenda J. Hathaway - Page 26

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          characteristic of a principal and an independent contractor.                
          After weighing the above factors, giving particular weight to (1)           
          the lack of control, and lack of right to control, that TAG had             
          over its sales representatives, and (2) Hathaway’s substantial              
          investments and unreimbursed expenses, we conclude that Hathaway            
          was an independent contractor, and not a common law employee in             
          1989 and 1990.                                                              
               We hold for petitioners on this issue.                                 
               In Rev. Rul. 90-93, 1990-2 C.B. 34, respondent announced the           
          position that a person described in section 3121(d)(3), commonly            
          referred to as a “statutory employee”, is “not an employee for              
          purposes of sections 62 and 67.”  The parties cast much of their            
          presentation in terms of section 3121(d)(3).  Because of our                
          determination that in 1989 and 1990 Hathaway was an independent             
          contractor for purposes of section 62(a), Hathaway’s trade or               
          business expenses are deductible “above the line” on Schedule C,            
          and need not be relegated to Schedule A.  This result would not             
          be changed no matter how we were to rule on the section                     
          3121(d)(3) issue, and so we decline to rule on that issue in the            
          instant case.                                                               

               To take account of the parties’ agreements,                            

                                                  Decision will be entered            
                                             under Rule 155.                          

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