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During the years at issue, petitioner was a 50-percent owner
of Worldwide Technology Solutions, Inc. (the corporation).2 The
corporation placed consultants with businesses and government
agencies for a fee. Petitioner also operated a similarly named
sole proprietorship called Worldwide Technology Solutions (WTS).
Petitioner described WTS as a business consulting firm. He
explained that WTS provided direct consulting services, whereas
the corporation provided consultants. It is not clear why WTS
and the corporation had nearly identical names.
In addition to his involvement with the corporation and WTS,
petitioner worked full time for the California State Board of
Equalization (SBOE) as a program manager. SBOE was also one of
the corporation’s clients in 2000 and 2001. Petitioner could not
recall whether WTS had any clients in 2000. WTS had one client
in 2001, a company called “3com”. WTS performed a feasibility
study for 3com and made a proposal to update 3com’s business
software. 3com did not accept the proposal and instead
contracted with the corporation for a consultant. WTS was not
paid for the study it performed.
The corporation was operated from an office in Sacramento.
WTS was operated from petitioners’ home, but it also leased
2 The corporation’s tax liability is not at issue. At
trial, however, the parties made frequent reference to the
corporation for purposes of comparing it with the sole
proprietorship. We therefore include information about the
corporation necessary to address the parties’ arguments.
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