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$90,000 income reported) and $42,000 (i.e., $132,000 income
received minus $90,000 income reported) relating to 1992 and
1994, respectively.
III. Employment Status
Respondent determined in the notice of deficiency that
payments from Western, reported on petitioners’ Schedule C, are
wage compensation and the business expenses deducted by
petitioners are miscellaneous itemized deductions. Respondent
contends that petitioner was an employee of Western because he
was an officer who performed substantial services. Petitioner,
relying on several contentions that have been rejected in similar
circumstances, contends that he was not an employee of Western.
Pursuant to section 3121(d)(2), the term “employee” includes
any individual who has the status of an employee under the
applicable common law rules. Paragraphs (1), (3), and (4) of
section 3121(d) delineate “statutory employees”. These
individuals are considered employees regardless of their status
under the common law. See Joseph M. Grey Pub. Accountant, P.C.
v. Commissioner, 119 T.C. 121, 126 (2002). Any officer of a
corporation is a statutory employee, if such officer performs
substantial services for a corporation and receives remuneration
for those services. See Veterinary Surgical Consultants, P.C. v.
Commissioner, 117 T.C. 141 (2001), affd. sub nom. Yeagle Drywall
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