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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 the
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