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petitioner’s legal counsel for purposes of respondent’s audit
(and presumably for purposes of any litigation that resulted
thereafter); in some cases, the affidavits were incomplete as to
the dates of the affiant’s service in the gaming operation. The
affidavits for the most part were presented to the affiants for
their signature at a monthly board meeting of petitioner in the
presence of petitioner’s current trial counsel, who signed as
notary of many of the affidavits.
Petitioner also challenges a characterization of the
security guards as workers in petitioner’s gaming operation for
purposes of the “substantially all” test of section 513(a)(1).
We conclude that the characterization is appropriate. Petitioner
argues that the security guards did not work in the gaming
operation because they were independent contractors rather than
employees. We disagree. The fact that the security guards were
directly compensated by another entity through a contract with
petitioner is of no consequence to our determination under
section 513(a)(1). A plain reading of that section requires that
we focus on the “work” performed in “carrying on such trade or
business”. We read nothing in the statute that limits this work
to that performed by employees as opposed to independent
contractors. See also Executive Network Club, Inc. v.
Commissioner, T.C. Memo. 1995-21 (finding that casino workers
paid in tips by players worked for compensation even though the
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