3
interested in petitioner's services negotiated a "deal memo" with
petitioner which included the daily rate for her first 8 hours of
work, overtime pay, break time, and whether a "kit"2 would be
provided by the company where she was working. After being hired
and in order to receive remuneration, petitioner recorded her
time on a timesheet which she turned in to members of the
production staff. Petitioner was usually paid on a weekly basis.
Petitioner reported Schedule C income in the amount of
$23,519 on her 1994 income tax return. Of this amount,
petitioner reported Form W-2 income in the amount of $20,218,
Form 1099 income in the amount of $2,626, and income from kit
rentals in the amount of $675. Petitioner claimed 1994 Schedule
C deductions in the amount of $22,249.
Petitioner was required to move suddenly in January of 1997,
during a time at which petitioner was also suffering from
depression. As a result of both the unforeseen move and her
medical condition, petitioner's 1994 receipts for paid expenses,
among other items, were lost.
In a notice of deficiency dated February 5, 1997, respondent
determined that petitioner's Form W-2 income did not qualify as
Schedule C statutory employee income and respondent, therefore,
disallowed all of petitioner's offsetting Schedule C deductions.
2 Though it is unclear from the record, a "kit" apparently
refers to a makeup kit stocked with cosmetic supplies.
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