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income and to claim their employee expenses, if properly
substantiated, on Schedule A as a deduction from AGI, subject to
certain limitations. Accordingly, we must conclude that
respondent’s determinations that the nonemployee compensation
reflected on the Forms 1099-MISC is includable in gross income
were not in error.4
Petitioners contend that they need not prove or justify
their employee expenses because of respondent’s failure to
expressly state that petitioners were not entitled to claim the
expenses. Petitioners argue that the offsetting expenses
reflected on the Forms 2106 are not in issue and that we have no
jurisdiction over them. If that were petitioners’ sole argument,
even if they were successful, it would have no effect on the
income tax deficiencies determined by respondent.5 That is so
because petitioners used the expenses to offset compensation that
4 In addition, petitioners do not question the correctness
of respondent’s determination that they failed to show that the
excess amounts of employee expenses that were claimed on the
Schedules A were ordinary and necessary or expended for the
purpose stated.
5 We must note that if respondent had merely disallowed the
offsetting expenses reflected by petitioners on their Forms 2106
and had not made any adjustment to the Form 1099-MISC
compensation, there would have been no resulting income tax
deficiency. That is so because petitioners did not first include
the compensation in the gross income that was used to compute
their adjusted gross income and, ultimately, their taxable
income.
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