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sound law the rule that a taxpayer need not treat as income
moneys which he did not receive under a claim of right, which
were not his to keep, and which he was required to transmit to
someone else as a mere conduit.” See also Ancira v.
Commissioner, 119 T.C. 135, 138 (2002).
Money received as a mere agent or conduit is not includable
in gross income. Liddy v. Commissioner, 808 F.2d at 314; Diamond
v. Commissioner, supra at 541; Heminway v. Commissioner, 44 T.C.
96, 101 (1965).
The Court finds credible the testimony of both petitioner
and Mr. Fullen that the compensation earned actually belongs to
Mr. Fullen. The Court holds the nonemployee compensation is not
attributable to petitioner and she is not liable for self-
employment tax.
In the Joint Motion for Continuance, respondent expressed
his intention to issue a notice of deficiency to Mr. Fullen for
the nonemployee compensation in issue. Mr. Fullen has already
provided respondent with his Social Security number and has
claimed full responsibility for the taxes owed on the
compensation. Mr. Fullen’s failure to file an individual income
tax return for 1998 does not impair respondent’s ability to issue
a notice of deficiency to him. The open period of limitations
serves as an aid in respondent’s pursuit of Mr. Fullen for this
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Last modified: May 25, 2011