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TLC, which was incorporated in Indiana in 1986, was a wholly
owned subsidiary of petitioner and a member of petitioner’s
affiliated group. TLC’s corporate headquarters were in Arden
Hills, Minnesota, its payroll services operations were in
Audubon, Minnesota, and its human resources operations were in
Porter, Indiana.
TLC was a driver-leasing company that leased one or more
truck drivers to small and mid-sized independent trucking compa-
nies which used such truck drivers to transport goods and mer-
chandise.6 Prior to the times such trucking companies entered
into driver-leasing arrangements with TLC (described below), they
had (1) made payments to all of their respective truck drivers
who worked for them that were intended to compensate such drivers
for their work and (2) generally made payments (per diem pay-
ments) only to their respective over-the-road7 truck drivers who
worked for them that were intended to cover the amounts that such
truck drivers spent for food and beverages while traveling away
from home.
As of the beginning of taxable year 1993, TLC was leasing
6We shall refer to each trucking company that leased one or
more truck drivers from TLC as a trucking company client and to
each truck driver whom TLC leased to a trucking company client as
a driver-employee.
7The term over-the-road means that the length of travel
required a truck driver to stay away from home overnight.
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