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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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