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Petitioner3 attended 3 years of college but did not obtain a
degree. From 1978 through the years in issue, petitioner owned,
operated, and was the president of Midwest. Midwest was a
photography business, and it earned income by participating in
fund-raising programs of local community service organizations.
From 1985 forward, Midwest worked exclusively with fire,
rescue, and ambulance departments in the four-State region of
Illinois, Iowa, Wisconsin, and Indiana. In addition to taking
the photographs, Midwest supplied the various departments with
professionals to assist in soliciting donations and handing out
complimentary certificates. Under this arrangement, Midwest
received approximately 50 percent of the donations plus the
income from the sales of additional photographs. Midwest
conducted its business in the four-State region by employing
"road people" to solicit donations, take the complimentary
photographs, and sell additional photographs. Midwest employed
two people in its home office.
Before the subject years, petitioner drew a salary from
Midwest for the work he performed. Midwest deducted his salary
as officer compensation. Petitioner essentially compensated
himself on a commission basis, setting his salary upon Midwest's
3References to petitioner are to Frank Muhich.
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