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By determining a penalty under section 6662(a), respondent
had the “burden of production * * * with respect to the liability
of any individual for any penalty”. Sec. 7491(c). Because we
have decided that petitioners are not liable for a section 6662
penalty, there is no need to address the question of the burden
on that issue.
B. Petitioner’s Status as an Employee
Petitioner’s status as an employee is important in this case
with respect to his ability to claim deductions in arriving at
gross income on a Schedule C. Petitioner claims that he is not
an employee and relies on sections 3121(d)(3) and 3508(b)(2). In
effect, petitioner claims to be self-employed and engaged in a
trade or business. Petitioner’s entitlement to claim that status
depends on whether petitioner is a “statutory” or “common law”
employee. The use of the term “common law employee” has evolved
from the definition of an “employee” for employment tax purposes
in section 3121(d). In particular, section 3121(d)(2) defines an
“employee” as “any individual who, under the usual common law
rules applicable in determining the employer-employee
relationship, has the status of an employee”.
The term “statutory employee” has been commonly used to
refer to employees whose status has been specifically provided
for in paragraphs (1), (3), and (4) of section 3121(d). Those
paragraphs describe other individuals whose employment status
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Last modified: May 25, 2011