                       T.C. Memo. 2000-239



                     UNITED STATES TAX COURT



              ANTHONY S. D’ACQUISTO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1145-99.                      Filed August 4, 2000.


     Edward X. Clinton, Jr., for petitioner.

     David S. Weiner, for respondent.


             MEMORANDUM FINDINGS OF FACT AND OPINION

     GOLDBERG, Special Trial Judge:     Respondent determined a

deficiency in petitioner’s Federal income tax for the taxable

year 1994 in the amount of $14,650.   Unless otherwise indicated,

section references are to the Internal Revenue Code in effect for

the year in issue.

     The sole issue in this case is whether petitioner is an

independent contractor and can claim Schedule C business expense
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deductions for the taxable year 1994.    We find that petitioner is

an employee and not an independent contractor and therefore

cannot deduct his business expenses on Schedule C.

                           FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time the petition

was filed, petitioner resided in Chicago, Illinois.

     In 1994, petitioner, under the stage name Tony Russell,

worked as a voice actor providing voice announcements and/or

narration for commercials, corporate videos, radio and television

promotionals, video games, talking toys, and television shows.

Although petitioner provided services for television, cable, and

video, petitioner did not appear on screen.    Petitioner began his

career as a voice actor by studying communications at the

University of Wisconsin.    Between the years 1977 and 1983,

petitioner worked with NBC as both booth announcer on television

and a “swing personality” on radio stations.    After working with

NBC, petitioner began providing services to various parties on a

contractual basis.

     During the year in issue, petitioner was a member of both

the Screen Actors Guild and the American Federation of Television

and Radio Artists (unions).    The unions set minimum standards for

performer fees based on a collective bargaining agreement and
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settled jurisdictional disputes.   For example, only radio and

television commercials were subject to the unions’ fee schedule.

     Health and disability insurance benefits were also provided

through the unions and not by the companies that retained

petitioner’s services.   The unions continued coverage if

petitioner met a certain annual income requirement under the

union contract.   If petitioner failed to meet the income

requirement in any given year, the unions would discontinue

coverage.   Moreover, petitioner did not receive vacation time

from the unions or companies that retained his services.

     Petitioner also participated in pension plans offered by the

unions.   At the time of trial, petitioner was fully vested in

these pension plans; however, the record does not reflect whether

petitioner was fully vested during the year in issue.

     During 1994, petitioner hired three agencies to procure work

assignments from interested companies: Don Buckwald in New York,

Voices Unlimited in Chicago, and Cunningham, Escott & Dipene in

Los Angeles.   These agents worked with “buyers”, the producers of

commercials, video games, toys, television, cable or radio shows,

who engaged petitioner for his services.   An interested company

would request demonstration tapes from an agent, review the

tapes, hold auditions, make its decision, and then call the agent

to negotiate the terms of the contract.

     For radio and television commercials, petitioner’s agents
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negotiated the terms of the engagement based upon the unions’ fee

schedule.    Compensation for all other assignments was negotiated

outside of the unions’ fee schedule.     It is unclear from the

record whether fees were negotiated based on an hourly rate or on

a fixed amount per engagement.    Nevertheless, petitioner received

a separate paycheck stub for each job completed and in most cases

a Form W-2, Wage and Tax Statement, for services rendered.1

     In addition to work assignments procured by his agents,

petitioner solicited additional work by mailing promotional

compact disks containing samples of his commercials and

announcements directly to producers of various entertainment

companies.    With regard to all types of engagements, petitioner

made the final determination whether to accept or to reject the

work.    Most of petitioner’s assignments were completed at studio

facilities arranged by the company at a time mutually convenient

for both parties.    Any tools or other materials necessary for the

assignment were provided by both petitioner and the hiring

company.    Petitioner testified that he did not work “full time”

for a particular company during the year in issue.

     Petitioner reported Schedule C gross income in the amount of

$189,173 on his 1994 Federal income tax return.     It comprises


     1
       For 1994, 94.93 percent of petitioner’s Schedule C income
was reported on Forms W-2 and the remaining 5.07 percent of
petitioner’s Schedule C income was reported on Forms 1099.
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income reported on Forms W-2 in the amount of $179,578 and other

“talent fees” in the amount of $9,595.    Although petitioner

testified that he performed jobs for “hundreds of different

agencies”, he received and filed with his 1994 return only 10

Forms W-2 issued from the agencies and in some cases directly

from the hiring companies.   Petitioner claimed 1994 Schedule C

business expense deductions in the amount of $65,510.2     On

Schedule SE, Self-Employment Tax, petitioner computed his self-

employment tax liability as follows:

     Gross profit from Schedule C              $189,173
     (Less expenses)                            (65,510)
     Net profit from Schedule C                 123,663
     (Less “Statutory Wages”)3                 (117,391)
     Reported net profit on Schedule SE          $6,272

     In a notice of deficiency respondent determined that

petitioner was not a qualified performing artist within the

meaning of section 62(b)(1).   Respondent determined that

petitioner was an employee, and recharacterized 94.93 percent of

petitioner’s Schedule C business expenses, or $62,187, as job-

related Schedule A miscellaneous itemized deductions, subject to

the 2-percent limitation under section 67.    Based upon the

adjustments to Schedule A, respondent determined petitioner’s


     2
       The substantiation of petitioner’s business expense
deductions is not at issue in this case.
     3
       Petitioner arrived at “Statutory Wages”, or $117,391, by
applying the fraction from Forms W-2 income in the amount of
$179,578 over the total income reported on Schedule C in the
amount of $189,578, which equals 94.93 percent.
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alternative minimum tax liability in the amount of $11,906.

Respondent determined petitioner’s total deficiency in the amount

of $14,650.

                              OPINION

     Respondent contends that petitioner is an employee of the

companies he provided services to, that these companies treated

him as an employee by issuing Forms W-2 to petitioner for his

services, and that petitioner failed to pay self-employment tax

on his total income from self-employment.   Respondent further

contends that petitioner did not have the requisite control over

his activities to be considered an independent contractor.

     Petitioner concedes that he is not a qualified performing

artist within the meaning of section 62(b)(1).   Petitioner

contends that he is an independent contractor entitled to

Schedule C business expense deductions even though most of his

1994 income was reported as employee wages on Forms W-2.

     To determine whether a taxpayer is an independent contractor

or an employee, common-law rules apply.   See Weber v.

Commissioner, 103 T.C. 378, 387 (1994), affd. per curiam 60 F.3d

1104 (4th Cir. 1995).   Courts consider various factors to

determine whether an employment relationship exists between the

parties, including: (1) The degree of control exercised by the

principal; (2) which party invests in work facilities used by the

individual; (3) the opportunity of the individual for profit or
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loss; (4) whether the principal can discharge the individual; (5)

whether the work is part of the principal’s regular business; (6)

the permanency of the relationship; and (7) the relationship the

parties believed they were creating.   See id.   All the facts and

circumstances of each case should be considered.    See id.

     The right of control is ordinarily the crucial factor in

determining whether an employer-employee relationship exists.

See Matthews v. Commissioner, 92 T.C. 351, 361 (1989), affd. 907

F.2d 1173 (D.C. Cir. 1990).   To retain the requisite control over

the details of an individual’s work, the principal need not stand

over the individual and direct every move made by the individual.

See Weber v. Commissioner, supra at 388.

     Petitioner failed to establish that he had sufficient

control over the relationship at the time service was rendered to

be classified as an independent contractor.    According to

petitioner’s own testimony, upon acceptance of a job, the hiring

company provided a script and instructed petitioner to read it

according to the company’s specifications.    If the company

preferred a change in how the script was read, petitioner would

be required to make the requested adjustments.

     Petitioner argues that having the right to pick and choose

the jobs of his choice demonstrates he had control over his

services.   However, petitioner failed to establish the details of

control he had over the engagement agreement once petitioner
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accepted a job.   For instance, petitioner’s services were

negotiated through agents and memorialized in written agreements

or contracts.   At trial petitioner referred to a number of

agreements he entered into with the various companies he worked

for during the year in issue but failed to introduce them into

evidence.   Without the contracts in the record for our review, we

cannot assume that petitioner had the requisite control over his

services.

     Furthermore, the record reflects that petitioner willingly

accepted Forms W-2 for services.   Although he may not have

considered himself an employee of the companies for which he

provided services, it is clear that the companies considered him

an employee during the engagement because they issued Forms W-2

and withheld FICA, FUTA, and State employment taxes.     The record

also reflects that three different companies checked the “pension

plan” box on petitioner’s Forms W-2, although petitioner

testified he had no independent knowledge of participation in any

pension plan other than the unions.    Petitioner admits that he

failed to correct the companies’ alleged “error” in treating him

as an employee by issuing him Forms W-2 for his services.

     Finally, petitioner’s argument that working for a number of

companies demonstrates a lack of continuity in the employer-

employee relationship is without merit.    In Kelly v.

Commissioner, T.C. Memo. 1999-140, this Court found that working
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for a number of employers during a tax year does not necessitate

treatment as an independent contractor.

     The case before us is a factual one.       Petitioner’s failure

to have corrected Forms W-2 issued to him and failure to pay

self-employment tax under petitioner’s own theory militates

against his case before us.   Moreover, without the contracts

before us, we cannot find that their provisions corroborate

petitioner’s claim that he was an independent contractor.       In

sum, petitioner did not demonstrate that he is entitled to

treatment as an independent contractor.       Consequently, we find

that petitioner was an employee for the 1994 taxable year and is

therefore not entitled to claim business expense deductions on

Schedule C for the year in issue.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.
