-4- reference to EAPC, on documents accounting for expenses, payments, and sales commissions connected with her real estate practice associated with Coldwell Banker. Mr. Arnold was the 100-percent owner of Pacific Controller, Inc. (PCI). Mr. Arnold operated PCI as a vehicle for his accounting and tax preparation business. Mr. Arnold assigned to PCI the payments he received from customers for his personal accounting services. PCI has never paid Mr. Arnold wages or a salary. Mr. Arnold had complete control over whether PCI paid and/or reported wages to him. PCI has never withheld payroll taxes on the money it distributed to Mr. Arnold. There was no contract between Mr. Arnold and PCI giving PCI the right to control Mr. Arnold’s performance of services. EAPC and PCI are S corporations. Petitioners reported nonpassive income (distributions of net income after expenses) from EAPC and PCI on Schedules E, Supplemental Income and Loss, of their 2002 and 2003 joint Federal income tax returns. Mr. Arnold prepared the 2002 and 2003 tax returns for petitioners, EAPC, and PCI. Petitioners reported zero wage income on their 2002 and 2003 joint Federal income tax returns.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: November 10, 2007