- 5 -
never paid wages or a salary to Mr. Arnold. Petitioners treated
all of the amounts distributed to Mr. Arnold from Pacific as
loans. Mr. Arnold signed a promissory note in the amount of the
balance due at the end of each year. Pacific did not withhold
payroll taxes on payments to Mr. Arnold. Petitioners reported
$41,544 of income as flowthrough from Pacific on the Schedule E,
Supplemental Income and Loss, attached to their Form 1040, U.S.
Individual Income Tax Return, for 2001.
D. Mrs. Arnold’s Real Estate Activities and Edith Arnold, P.C.
Mrs. Arnold held a license to sell real estate in 2000 and
2001. In those years, Mrs. Arnold was a real estate agent for
the Coldwell Bank Barbara Sue Seal Agency (Seal), a real estate
brokerage. Mrs. Arnold signed a Form W-9, Request for
Identification Number and Certification, on January 10, 1999, and
wrote on the bottom of the form: “Please do not issue a 1099 for
me.”
Seal and Mrs. Arnold signed an addendum to an independent
contractor agreement on October 30, 2000, and another independent
contractor agreement in January 2001. Seal made payments to Mrs.
Arnold in her name.
Edith Arnold, P.C. (EAPC), is an S corporation owned by Mrs.
Arnold and incorporated on a date not stated in the record. Mrs.
Arnold was president of EAPC. Mrs. Arnold assigned the
commissions and income she received from Seal to EAPC during the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011