- 4 -
the expenses incurred by petitioner in connection with his
activity constituted unreimbursed employee business expenses that
were deductible on Schedule A, Itemized Deductions, but subject
to the limitation of section 67(a). For the 3 years at issue,
respondent allowed all the car and truck expenses claimed by
petitioner on his Schedule C as itemized deductions. Similarly,
respondent allowed petitioner an itemized deduction for meals for
1994 but disallowed the amounts claimed for meals for 1995 and
1996.3 Respondent also disallowed utilities expenses claimed for
1994 and 1995, which petitioner conceded at trial. See supra
note 2.
With respect to the first issue, whether an individual is an
employee or an independent contractor is a factual question to be
answered using common-law principles. See Nationwide Mut. Ins.
Co. v. Darden, 503 U.S. 318, 322-325 (1992); Professional &
Executive Leasing, Inc. v. Commissioner 89 T.C. 225, 232 (1987),
affd. 862 F.2d 751 (9th Cir. 1988); Weber v. Commissioner, 103
T.C. 378, 386 (1994), affd. 60 F.3d 1104 (4th Cir. 1995). In
3 At trial, respondent orally moved to increase the
deficiency for 1994 for the disallowance of $2,625 in meal
expenses, which respondent contends was erroneously allowed in
the notice of deficiency. Although the deductibility of meal
expenses is in part a legal question, the meal expenses for 1995
and 1996 were also disallowed for lack of substantiation. Since
petitioner had no knowledge prior to trial that respondent would
move to increase the deficiency for 1994, respondent's oral
motion will be denied.
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