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license and could not own the agency under Washington law.
However, Mr. Edwards held an insurance license, and we find him
to be the true owner of the Edwards agency. As the single owner
of a disregarded entity deemed a sole proprietorship, Mr. Edwards
is taxed on the Edwards agency’s income. Sec. 301.7701-2(a),
Proced. & Admin. Regs.
It is immaterial that the day-to-day business operations of
the Edwards agency were carried on by Ms. Payne and other
employees. For purposes of income being included in an
individual’s net earnings from self-employment, a trade or
business can be “carried on” by an individual either personally
or through agents or employees. Newberry v. Commissioner, supra
at 444; S. Rept. 1669, supra, 1950-2 C.B. at 306, 353-354; sec.
1.1402(a)-2(b), Income Tax Regs. Petitioners do not contest that
Ms. Payne and other Edwards agency workers were employees of Mr.
Edwards’s deemed sole proprietorship. Accordingly, this Court
finds that Edwards agency income constitutes gross income derived
from a trade or business carried on by Mr. Edwards under section
1402.
In reaching these holdings, the Court has considered all
arguments made and, to the extent not mentioned, concludes that
they are moot, irrelevant, or without merit.
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Last modified: March 27, 2008