-24-
while arguably not long in hours, were indispensable to
petitioner’s business.
Whereas the employment agreement provides that petitioner
was a “start-up company with limited cash flow”, we do not agree.
First, we scrutinize that agreement strictly given that it was a
contract simply entered into by Ms. Odell, on one side in her
capacity as an individual and on the other side in her capacity
as petitioner’s officer, and that it was made effective
approximately 20 months beforehand. Second, although the
corporation (i.e., petitioner) may have been relatively young,
petitioner’s business was old in that Ms. Odell had been
operating it for some time. Third, as to the claim of “limited
cash flow”, petitioner reported taxable income in both 1995 and
1996 and had enough available funds during those years to pay to
Ms. Odell “rent” and “royalties” totaling $49,248 and $36,700,
respectively.
We also give little weight to the fact that Ms. Odell’s
employment agreement with petitioner provided as to the relevant
years that she would be paid only for the last 5 months of 1996
and that, for those months, she would receive only $400 per
month. An employer such as petitioner may not evade Federal
employment taxes simply by characterizing payments to its
principal worker as something other than wages. Spicer
Accounting, Inc. v. United States, supra; see also Boles
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