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reimbursed to some extent, petitioner was told that they did not
“know what degree * * * whether 60 or 70 percent.”
NSBE’s records show that petitioner received two payments
during 1998 and 1999. The first, a $6,000 payment dated October
23, 1998, was labeled as a payment for “Commissions”. The
second, an $8,000 payment dated February 18, 1999, was labeled as
a payment for “Commission 97-98". The latter payment is the
payment at issue in this case. NSBE issued a Form 1099-MISC,
Miscellaneous Income, to petitioner for taxable year 1999. This
form reflected nonemployee compensation of $8,000.
Petitioner filed an individual Federal income tax return for
taxable year 1999. Petitioner did not report as income any
portion of the $8,000 payment which he received from NSBE,
despite his assertion at trial that a portion of this payment was
for nonemployee compensation rather than a reimbursement of
educational expenses. In the statutory notice of deficiency,
respondent determined that the entire $8,000 was includable in
petitioner’s gross income and subject to self-employment income
tax.
Petitioner argues that, while a portion of the $8,000 was
indeed nonemployee compensation, the bulk of the payment was a
reimbursement of his educational expenses--which he refers to as
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