Frederick M. and Cheryl A. Prouty - Page 9

                                        - 9 -                                         
          100 T.C. 457, 471 (1993), affd. in part, revd. in part and                  
          remanded on another issue 43 F.3d 172 (5th Cir. 1995).                      
               As relevant herein, the position of the United States that             
          must be examined in light of the substantial justification                  
          standard with respect to the recovery of administrative costs is            
          the position taken by the Commissioner as of the date of the                
          notice of deficiency.  See sec. 7430(c)(7)(B).                              
               In order to decide whether the Commissioner's position was             
          substantially justified we must review the substantive merits of            
          the case.                                                                   
               Reasonable Basis In Fact                                               
               In Rev. Rul. 90-93, 1990-2 C.B. 33, respondent announced the           
          position that a person described in section 3121(d)(3), commonly            
          referred to as a "statutory employee", is "not an employee for              
          purposes of sections 62 and 67."  Such persons may properly                 
          reflect business income and expenses in full on Schedule C in               
          calculating adjusted gross income under section 62(a)(1).                   
          Persons who are employees for purposes of sections 62 and 67 have           
          their miscellaneous deductions limited as provided by section               
               Petitioners do not appear to suggest that respondent applied           
          the wrong legal standard in taking a position denying their                 
          deduction on Schedule C of expenses for the business of "TV Sales           
          Executive" under the business name, "WZTV & WNAB".  A reading of            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011