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employer set forth in section 1.401-10(e), Income Tax Regs.,
provides:
(e) Definition of employer. (1) For purposes of section 401,
a sole proprietor is considered to be his own employer, and
the partnership is considered to be the employer of
each of the partners. * * *
The Peerses received their remuneration as independent
contractors. Petitioner reported the commissions paid to the
Peerses on its corporate income tax returns, Forms 1120, not as
line 12, "Compensation of officers", or as line 13 "Salaries and
wages". Rather, petitioner included the commissions on line 26,
"Other deductions". Likewise, the Peerses reported the
commissions on their Schedule C for each of the years at issue as
independent contractors and enjoyed the ability to offset that
income with deductions unreduced by the 2 percent of adjusted
gross income offset applicable to miscellaneous deductions on
Schedule A.
Petitioner paid the Peerses as independent contractors. The
direct consequence of structuring its affairs in this manner, is
that the remuneration which Robert and Charlene Peers received
from the petitioner as independent contractors, which they
reported on Schedule C, does not constitute "participant's
compensation" for purposes of computing the section 415
limitations for each of the limitation years at issue.
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Last modified: May 25, 2011