- 5 -
income reported on Forms W-2 in the amount of $179,578 and other
“talent fees” in the amount of $9,595. Although petitioner
testified that he performed jobs for “hundreds of different
agencies”, he received and filed with his 1994 return only 10
Forms W-2 issued from the agencies and in some cases directly
from the hiring companies. Petitioner claimed 1994 Schedule C
business expense deductions in the amount of $65,510.2 On
Schedule SE, Self-Employment Tax, petitioner computed his self-
employment tax liability as follows:
Gross profit from Schedule C $189,173
(Less expenses) (65,510)
Net profit from Schedule C 123,663
(Less “Statutory Wages”)3 (117,391)
Reported net profit on Schedule SE $6,272
In a notice of deficiency respondent determined that
petitioner was not a qualified performing artist within the
meaning of section 62(b)(1). Respondent determined that
petitioner was an employee, and recharacterized 94.93 percent of
petitioner’s Schedule C business expenses, or $62,187, as job-
related Schedule A miscellaneous itemized deductions, subject to
the 2-percent limitation under section 67. Based upon the
adjustments to Schedule A, respondent determined petitioner’s
2 The substantiation of petitioner’s business expense
deductions is not at issue in this case.
3 Petitioner arrived at “Statutory Wages”, or $117,391, by
applying the fraction from Forms W-2 income in the amount of
$179,578 over the total income reported on Schedule C in the
amount of $189,578, which equals 94.93 percent.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011