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C. Opportunity for Profit or Loss
A worker’s opportunity to earn a profit and assume risk of
loss may indicate a nonemployee status. Simpson v. Commissioner,
64 T.C. 974, 988 (1975). On the other hand, earning an hourly
wage or salary indicates an employer-employee relationship
exists. Del Monico v. Commissioner, T.C. Memo. 2004-92; Kumpel
v. Commissioner, T.C. Memo. 2003-265.
The drivers were not paid an hourly wage or salary. They
were paid 23 to 27 percent of the 75 percent petitioner received
per load hauled, and the amounts earned depended entirely upon
the number of trips they made. The drivers did not assume any
risk of loss. As stated in the agreement, a driver could not
incur any indebtedness on behalf of petitioner. This factor
indicates an employer-employee relationship.
D. Right To Discharge
Generally, an employers’ right to discharge an employee
indicates an employer-employee relationship. Sec. 31.3121(d)-
1(c)(2), Employment Tax Regs. The parties stipulated that
petitioner retained the right to discharge its drivers and the
drivers had a right to terminate their relationship with
petitioner. However, at trial Mr. Peno testified that he
personally would not terminate a driver; instead Ohio Transport
or the mills would ban the driver. Mr. Peno’s testimony as to
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