Shawnee E. Tefteller - Page 7




                                        - 6 -                                         
          Respondent does not have an original or copy of the Form 1040X on           
          file with the Internal Revenue Service.  At trial, petitioner               
          gave a second Form 1040X, signed on March 6, 2000, to respondent.           
          Petitioner reported the settlement proceeds of $15,000 on her               
          Schedule C, as gross income, on each Form 1040X.  Petitioner                
          further deducted, on each Form 1040X, attorney’s fees and costs,            
          related to the litigation, under legal and professional services            
          on Schedule C.  However, on the Form 1040X signed on March 6,               
          2000, petitioner further deducted an amount paid to Mr. Anderson            
          from the settlement award.                                                  
               In a notice of deficiency, respondent determined that                  
          settlement proceeds of $15,000 received by petitioner were fully            
          includable in gross income and attorney’s fees and costs                    
          associated with the litigation were Schedule A miscellaneous                
          itemized deductions, subject to the 2-percent limitation under              
          section 67.  Lastly, respondent determined that petitioner is not           
          entitled to deduct payments made to her former husband from the             
          settlement award.                                                           
          Independent Contractor or Employee                                          
               To determine whether a taxpayer is an independent contractor           
          or an employee, common-law rules apply.  See Weber v.                       
          Commissioner, 103 T.C. 378, 387 (1994), affd. per curiam 60 F.3d            
          1104 (4th Cir. 1995).  Courts consider various factors to                   
          determine whether an employment relationship exists between the             






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