- 38 - Our decision is supported by the agreements entered into between P.I. Ministries and the OMK Company Trust. Those agreements stated that the OMK Company Trust contracted petitioners’ services to P.I. Ministries on an independent contractor basis. Consequently, because no employment relationship was created, P.I. Ministries did not withhold or pay any employment taxes on the compensation paid for petitioners’ services. Having been given the opportunity to choose the form of the contract, petitioners have less freedom than respondent to ignore the transactional form that they have adopted. See Coleman v. Commissioner, 87 T.C. 178, 202 (1986), affd. without published opinion 833 F.2d 303 (3d Cir. 1987); Bolger v. Commissioner, 59 T.C. 760, 767 n.4 (1973). Petitioners were independent contractors, and as such they are subject to self-employment tax. See Simpson v. Commissioner, 64 T.C. 974, 983 (1975). We sustain respondent’s determination on this issue. VI. Petitioners Are Liable for the Accuracy-Related Penalty Under Section 6662(a) Section 6662(a) and (b)(1) imposes a penalty equal to 20 percent of the portion of an underpayment of income tax attributable to negligence or disregard of rules or regulations. Negligence is defined as “any failure to make a reasonable attempt to comply with the provisions of * * * [the Code]”. Sec. 6662(c). Negligence is the lack of due care or the failure to do what a reasonable and prudent person would do under thePage: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Next
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