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the day-to-day operations of the agency for several years, the
record does not indicate that the renewal commissions were earned
by other Edwards agency employees. Mr. Edwards worked as a
principal agent for his insurance agency for decades, and the
Court has received no evidence that traces the Edwards agency’s
2003 renewal commissions to the work of other insurance agents.
Accordingly, we find that the Edwards agency’s renewal
commissions constitute self-employment income to Mr. Edwards.
Respondent also alleges that the current business activities
of the Edwards agency constitute the carrying on of a trade or
business by Mr. Edwards. We agree with respondent.
A limited liability company with a single owner is
disregarded as an entity separate from its owner for Federal
income tax purposes unless the entity elects to be classified as
an association. Sec. 301.7701-3(a) and (b), Proced. & Admin.
Regs. If a business entity with only one owner is disregarded,
its activities are treated in the same manner as a sole
proprietorship, branch, or division of the owner. Sec. 301.7701-
2(a), Proced. & Admin. Regs.
Petitioners treated the Edwards agency as a disregarded
entity that was not separate from its owner, and they clearly
reported its income and expenses on their Schedule C. Despite
listing herself as the proprietor of the Edwards agency on
petitioners’ return, Mrs. Edwards did not possess an insurance
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