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Additionally, the notice applied a 10-percent additional tax
of $400 to petitioner’s distribution from his IRA funds, because,
according to the notice of deficiency, he did not roll over the
distribution into another qualified retirement plan, he was not
disabled, or he was not at least 59-1/2 years old at the time of
the distribution. The notice also added the $17 of interest
received from the Commonwealth of Virginia to petitioner’s
income.
OPINION
Statutory Employee
Statutory employees may report their compensation, less
related expenses, as business income on Schedule C and thus may
avoid limitations on deduction of employee business expenses and
other itemized deductions reportable on Schedule A of individual
income tax returns. See Prouty v. Commissioner, T.C. Memo. 2002-
175; Hathaway v. Commissioner, T.C. Memo. 1996-389. An
individual is a statutory employee under section 3121(d)(3) only
if such individual is not a common law employee under section
3121(d)(2). Ewens & Miller, Inc. v. Commissioner, 117 T.C. 263,
269 (2001). Whether an individual is a common law employee under
section 3121(d)(2) is a question of fact. See Nationwide Mut.
Ins. Co. v. Darden, 503 U.S. 318, 322-324 (1992); Profl. &
Executive Leasing, Inc. v. Commissioner, 89 T.C. 225, 232 (1987),
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Last modified: May 25, 2011