Stephen J. Major - Page 5

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          headquarters located in Bensenville, Illinois.  Ms. Udell was               
          directed to write out the checks to petitioner by Mr. Art                   
          Wondrasek (Mr. Wondrasek), the president of QSN.  Mr. Wondrasek             
          hired petitioner and generally approved all compensation packages           
          for QSN employees.                                                          
               In addition to petitioner’s regular salary, the monthly $400           
          car allowance, and monthly $2,000 check, petitioner also received           
          employee expense reimbursements directly from QSN’s headquarters            
          after submitting a detailed expense report or currency exchange             
          worksheet.  Reimbursement checks were routinely sent to each                
          branch in weekly packages with other checks.                                
               For 1997, QSN prepared a Form W-2, Wage and Tax Statement,             
          and 2 Forms 1099-MISC, Miscellaneous Income, reflecting                     
          petitioner’s salary, car allowance of $4,800, and “commission”              
          income of $24,000, respectively.                                            
               Petitioner timely filed his income tax return for the                  
          taxable year 1997 reporting $57,090 in wages and the $4,800 car             
          allowance as gross receipts on his Schedule C, Profit or Loss               
          From Business.  Petitioner did not report as income the $24,000             
          from the $2,000 monthly check received during 1997 from QSN.                
               In a notice of deficiency respondent determined that                   
          petitioner failed to report the $24,000 as commission income                
          received during 1997, and, further, that the commission income is           
          subject to self-employment tax.  Respondent also determined that            

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