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certain criteria are met. The exclusion from gross income under
section 119 applies to employees only and is not allowed to
independent contractors. Accordingly, as a threshold matter,
petitioner must establish that she was an employee of Mr. Dixon’s
to invoke section 119.
To determine if section 119 has any applicability in this
case, we must first decide whether petitioner was a common law
employee receiving compensation or an independent contractor
receiving self-employment income. Answering this question will
also resolve the issue of whether petitioner is subject to self-
employment tax.
Section 1401 imposes an additional tax on the self-
employment income of every individual for old-age, survivors,
disability insurance, and for hospital insurance. The term
“self-employment income” refers to the net earnings derived by
the individual from self-employment in a trade or business. Sec.
1402(a) and (b); Spiegelman v. Commissioner, 102 T.C. 394, 396
(1994). “Trade or business”, for purposes of self-employment
income tax, has the same meaning as when used in section 162,
except that it does not include the performance of service by an
individual as an employee. Sec. 1402(c)(2). The definition of
an employee applicable to this case is “any individual who, under
the usual common law rules applicable in determining the
employer-employee relationship, has the status of an employee”.
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