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These Schedule C expenses consisted of $5,600 for driving 20,000
miles "hauling crew to worksite" and $620 spent on safety
equipment.
OPINION
We must decide whether petitioner correctly reported his
income and expenses on Schedule C of his return. Respondent
contends that petitioner, as an employee, must claim the expenses
at issue on his Schedule A as miscellaneous itemized deductions
and that they are limited to the extent they exceed the 2-percent
floor imposed by section 67. “To be reportable on Schedule C, a
taxpayer's income must arise from a trade or business, other than
that of being an employee. If a taxpayer's earnings arise from
working as an employee, they must be reported as wages.” Walker
v. Commissioner, 101 T.C. 537, 541 (1993). Petitioner admitted
at trial that he was an employee of Wes-Tex.
Section 62(a)(1) allows taxpayers to deduct from gross
income trade or business expenses “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.” The $6,220 in expenses deducted by
petitioners on their Schedule C was for unreimbursed employee
expenses. Petitioners therefore must deduct these expenses
subject to the 2-percent floor of section 67. Secs. 62, 67, 162;
In re Black, 131 Bankr. 106 (Bankr. E.D. Ark. 1991); see also
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