Richard and Judith Haeder - Page 7




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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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