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control that employee in some meaningful sense; and (b) there
exists a contract or similar arrangement between the corporation
and the person or entity using the services which recognizes the
corporation’s right to direct or control the work of the service
provider. Haag v. Commissioner, supra at 611; Johnson v.
Commissioner, supra at 891; see also Leavell v. Commissioner, 104
T.C. 140, 151-152 (1995).
Petitioners admitted that there was no contract between Mr.
Arnold and PCI recognizing the right of PCI to control Mr.
Arnold’s performance of services. There is no credible evidence
that Mrs. Arnold contracted with EAPC to perform real estate
services or that EAPC controlled Mrs. Arnold in some meaningful
sense.
We conclude that EAPC did not control Mrs. Arnold’s
performance of real estate services and that PCI did not control
Mr. Arnold’s performance of accounting or return preparation
services. Accordingly, we sustain respondent’s determination
that petitioners are subject to self-employment tax in 2002 and
2003 on income from their accounting/return preparation and real
estate activities.
II. Deductions
Deductions are a matter of legislative grace, and
petitioners have the burden of showing that they are entitled to
any deduction claimed. See Rule 142(a); New Colonial Ice Co. v.
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