Joseph J. House - Page 15




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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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