- 11 - To the extent that petitioner is entitled to any business expense deductions, respondent argues that the deductions should be treated as employee business expenses, deductible as miscellaneous itemized deductions. See secs. 62(a)(1) and (2), 67. In support of this argument, respondent points out that petitioner’s employment contracts with the DOI constitute agreements entered into pursuant to section 218 of the Social Security Act. That being so, respondent relies upon section 3121(d)(4), which defines “employee” for purposes of the Federal Insurance Contributions Act (FICA) as “any individual who performs services that are included under an agreement entered into pursuant to section 218 of the Social Security Act.” Respondent apparently takes the position that an individual who fits within the definition of employee for FICA purposes should be treated as an employee for purposes of section 62. We disagree. In Hathaway v. Commissioner, T.C. Memo. 1996-389, we held that a taxpayer described as an employee in section 3121(d)(3) is not necessarily an employee for purposes of the treatment of the taxpayer’s business expense deductions. Instead, we concluded that for such purposes, the distinction between an employee and an independent contractor is made through the application of common-law rules applicable in determining whether an employer- employee relationship exists. See id.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011