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the companies, taking into consideration petitioner's on-duty
hours. The amount and method of petitioner's compensation were
agreed upon between each company and petitioner, without
involvement by the Department. When petitioner performed
services for these companies, he wore his official uniform and
carried police-issued equipment such as handcuffs, gun, and night
stick. The income that petitioner received from the companies
was not taken into account in the computation of the pension
benefits to which he was entitled as a Dallas police officer.
During 1991, in addition to the income that petitioner
earned from the Department, he received compensation from the
companies in the following amounts:
Presbyterian $2,370
North Park 10,330
Parking Company 76
The companies considered petitioner an independent contractor and
reported the compensation paid to him on Forms 1099-MISC.
Petitioners included the above compensation in the amount they
reported as wages on their 1991 return. The Federal income tax
liability that petitioners reported on their 1991 return did not
include any amount attributable to the self-employment tax
imposed by section 1401.
In the notice of deficiency respondent determined that the
compensation petitioner received from the companies was subject
to the self-employment tax and computed the deficiency here in
dispute accordingly. Respondent's determination is based upon
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