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Concrete at various jobsites.7 Petitioners were both responsible
for the management and daily operations of Pauline’s Concrete.8
During the years at issue, petitioners were also employed by
the same construction contractors for whom Pauline’s Concrete
performed concrete pumping services. These services consisted of
providing and operating equipment which would pump concrete to
the specific locations needed by the customers as part of the
construction process. The parties stipulated: “This payment
arrangement was used in order for petitioners to maintain their
union membership in the union, but more importantly to the
petitioners, to get paid for the services they performed.” The
contractors issued Forms W-2, Wage and Tax Statement, to report
payments made to petitioners in their individual capacities.9
For 1991, 1992, and 1993, petitioners reported their lease
activities on Schedules E, Supplemental Income and Loss, attached
to their joint income tax returns, on which they reported net
losses of $171,980, $63,979, and $43,314, respectively. For
1991, 1992, and 1993, petitioners received rental income under
7Pauline’s Concrete employed approximately four to six
additional employees who also operated the leased equipment.
8Additionally, petitioner Pauline Kessler performed
administrative, clerical, and secretarial duties for Pauline’s
Concrete.
9Petitioners, in their individual capacities, received 20 to
30 Forms W-2, Wage and Tax Statement, each year from contractors.
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Last modified: May 25, 2011