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v. Commissioner, 336 U.S. 422, 437 n.20 (1949); Higgins v. Smith,
308 U.S. 473 (1940); Gregory v. Helvering, supra. On this
record, we find that JJH lacked economic substance and was merely
a paper entity that engaged in no meaningful business activity.
The purported purpose of JJH was to render accounting
services, yet it had no employees to carry out this purpose.7
Petitioner admits he was not an employee of JJH, testifying at
trial: "As Joseph J. House, the individual, I was not an
employee. I did not consider myself an employee of Joseph J.
House, Inc. I considered myself an independent contractor”. To
the extent petitioner suggests he was acting on behalf of JJH as
an independent contractor, we are not persuaded. Petitioner was
acting on behalf of himself individually when he rendered
services to clients. There was no employment or agency contract
between petitioner and JJH. There is no credible evidence that
there was a relationship between JJH and petitioner’s clients or
that the clients recognized JJH as the service provider. The
relationship was directly between petitioner and his clients.
Petitioner’s clients paid petitioner directly. JJH did not pay
petitioner compensation for his services and did not issue him a
Form 1099 or W-2. To embrace petitioner’s argument, we would
7Petitioner reported a negligible amount of wages paid on
JJH’s returns but does not argue these wages were paid to him,
and the record does not disclose who purportedly earned them.
Petitioner has not suggested that JJH’s payment of personal
expenses constitutes compensation.
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