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contributions to an IRA. Mrs. Header did not have a written
employment contract with petitioner. She had no set work
schedule, and she did not maintain any time or performance
records for work allegedly performed for petitioner.
On petitioner’s 1989 Schedule C, petitioner claimed a wage
expense of $1,918. On each of the Schedules C for 1990 through
1993, petitioner claimed a wage expense of $2,000. On
petitioners’ tax returns for the years at issue, Mrs. Haeder
reported $2,000 as income from wages for each of the years in
issue and also claimed a $2,000 IRA deduction for each of those
years.
Petitioner did not pay the purported salary directly to Mrs.
Haeder. For 1990, 1992, and 1993, on December 31 of each year,
petitioner had his brokerage firm transfer $2,000 from
petitioner’s account into an IRA maintained in Mrs. Haeder’s
name.4 For 1991, petitioner wrote a check dated December 31,
1991, in the amount of $1,847 and drawn on petitioners’ joint
account. Petitioner wrote that check payable to himself, Mrs.
Haeder endorsed it, and Mrs. Haeder deposited it into her IRA on
January 7, 1992.
Petitioner did not issue a Form W-2, Wage and Tax Statement,
to Mrs. Haeder for each of the years 1989 through 1992. With the
4Although petitioner claimed a deduction for wage expenses
of $1,918 for 1989, the record contains no proof of any payment
to or for the benefit of Mrs. Haeder in that year.
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