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represent remuneration for services rendered. Spicer Accounting,
Inc. v. United States, 918 F.2d 90 (9th Cir. 1990); Joseph Radtke,
S.C. v. United States, 895 F.2d 1196 (7th Cir. 1990).
Dr. Sadanaga’s reporting the distributions as nonpassive
income from an S corporation has no bearing on the Federal
employment tax treatment of those wages. He was petitioner’s sole
source of income. And as petitioner’s sole full-time worker he
must be treated as an employee. Spicer Accounting, Inc. v. United
States, supra at 94-95. Accordingly, we hold that Dr. Sadanaga is
an employee of petitioner for the period at issue and, as such, the
payments to him from petitioner constitute wages subject to Federal
employment taxes.
Despite our determination that Dr. Sadanaga is an employee of
petitioner, and that the payments to him from petitioner are wages
subject to Federal employment taxes, Section 530 allows petitioner
relief from employment tax liability if two conditions are
satisfied. Section 530(a)(1) provides in relevant part:
(1) In general.-–If
(A) for purposes of employment taxes, the
taxpayer did not treat an individual as an
employee for any period * * *, and
(B) in the case of periods after December
31, 1978, all Federal tax returns (including
information returns) required to be filed by
the taxpayer with respect to such individual
for such period are filed on a basis
consistent with the taxpayer’s treatment of
such individual as not being an employee,
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