- 7 - Ms. Novak-O’Farrell credibly testified that her duties included purchasing office supplies and business items. Petitioner’s authorization of her business purchases is evident from the fact that petitioner added her to his American Express account and gave her an American Express card in her name. It is also evident from the fact that petitioner reimbursed her for purchases made with her own funds and credit card. Ms. Novak- O’Farrell also testified that petitioner asked her to purchase personal items for him and his family as part of her duties. Ms. Novak-O’Farrell did not identify any additional agreed-upon compensation. Petitioner has not established that Ms. Novak-O’Farrell’s personal purchases, made with petitioner’s permission and on his credit card, were intended as compensation. Petitioner did not report additional compensation for alleged personal purchases as income to Ms. Novak-O’Farrell on a Form W-2, Wage and Tax Statement, for 1999, the year the purchases were made. We conclude that Ms. Novak-O’Farrell’s agreed-upon compensation from T-Foil Enterprises was her weekly wages, plus car payments and gasoline. Petitioner’s payments of additional, sporadic personal purchases, if any, were likely based on his friendship with Ms. Novak-O’Farrell. They were not additional fixed compensation for services rendered. See Anaheim Paper Mill Supplies, Inc. v. Commissioner, T.C. Memo. 1978-86; cf. Commissioner v. Duberstein, 363 U.S. 278, 285-286 (1960) (transfer of Cadillac to businessPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011