Kenneth W. Frische - Page 4




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          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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