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any of the facilities or equipment used in connection with the
baked goods he delivered.
For his services, petitioner was paid a base salary plus a
commission on the goods he delivered. His commissions, however,
were reduced for any stale or unsold goods that were removed from
store shelves. Petitioner was allowed paid vacation and sick
leave.
Each year, including the years at issue, Best Foods issued
to petitioner an IRS Form W-2, Wage and Tax Statement, which
reflected the net amounts paid to petitioner for his delivery
services. The payments to petitioner were characterized as
wages, from which Federal and State income and Social Security
taxes were withheld. Block 15 of the Form W-2, indicating
whether petitioner was a statutory employee, was not marked.
On his Federal income tax returns for the 2 years at issue,
petitioner reported the income shown on his Forms W-2 as gross
receipts from a trade or business activity on a Schedule C,
Profit or Loss From Business. He subtracted from gross receipts
an amount for cost of goods sold representing the stale and
unsold products he had removed from store shelves during the
year. Petitioner then claimed deductions for expenses incurred
in the activity.
In the notice of deficiency, respondent determined that
petitioner was a common-law employee, and, as such, his income
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