- 6 - respondent reclassified as wages to Ridge 50 percent of the nonpassive income distributed by petitioner. For 1997 and 1998, respondent also reclassified as wages the Form 1099-MISC “nonemployee compensation” paid to Ridge. It is stipulated that, if the Court decides that Ridge is to be classified as an employee for Federal employment tax purposes for all periods in 1996, 1997, and 1998, the amounts of taxes due and owing are as set forth in the notice of determination. ULTIMATE FINDINGS OF FACT Ridge, as president of petitioner, performed more than minor services and received remuneration therefor. Petitioner did not have a reasonable basis for failing to treat Ridge as an employee during the years in issue. OPINION I. Statutory and Regulatory Provisions A. Subtitle C of the Internal Revenue Code Subtitle C of the Internal Revenue Code governs payment of employment taxes. In particular, sections 3111 and 3301 impose taxes on employers under FICA (pertaining to Social Security) and FUTA (pertaining to unemployment), respectively, based on wages paid to employees. The term “wages” as used in these statutes generally encompasses “all remuneration for employment”. Secs. 3121(a), 3306(b). “Employee” is defined for purposes of FICA taxes in section 3121(d), and, with modifications not germanePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011