In Uncategorized on 11/08/2017 at 16:54

It turns out that the old saying about the shortest way home both helps and hurts Robert Hudson and Eleanor M. Hudson, 2017 T. C. Memo. 221, filed 11/8/17.

It’s Cap’n Bob’s story. Cap’n Bob was ex-Air Force Reserve and ex-Northwest Airlines, retired from both, but seeking to stay in the skies he loved. He wanted to go foreign, because the non-US flag carriers would respect his seniority. Why that matters is best described in fellow-aviator Ernest K. Gann’s 1961 classic “Fate is the Hunter.” That number can mean life or death.

So Cap’n Rob went to GAP. No, that’s not an accounting method, that’s a US recruiter of flyboys and girls for the global skies. Apparently, when Cap’n Bob was jobhunting, going through GAP paid more than a touch-and-go with the airlines’ headquarters. The long way round, y’know; it pays off.

Cap’n Bob was taken up by Korean Airlines. His deal with GAP said he wasn’t GAP’s employee, but an alone-in-the-sky IC.

Cap’n Bob got to push a 747-400 from and to The Land of the Morning Calm, and was a Seoul man, although he spent all his vacation days and downtime (when not on reserve) in the Land of the Free, where he owned three (count ‘em, three) homes, none of them principal.

Cap’n Bob was lucky to retain the services of Eric W. Johnson, esq., when IRS dumped some of his home mortgage deduction, and blew away his foreign earned income exclusion.

All y’all will remember EW, the hard-charging MN tax attorney who provides “honest representation at reasonable rates.” What, no? How fleeting is fame. Well, see my blogposts “Abate, Don’t Debate,” 8/25/14, and “Honest representations at reasonable rates,” 8/28/14.

Cap’n Bob’s foreigner status is a nonstarter. Too few days outside the home of the brave and the free, only the hotel-and-suitcase ties to The Land of the Morning Calm, and Cap’n Bob is back in the USA for tax purposes.

But IRS isn’t done. They claim the deal with GAP makes Cap’n Bob an IC. No he wasn’t, shows EW, and wins that one.

Judge Pugh: “We hold that Mr. Hudson’s proper work classification during the years in issue was that of an employee.  Korean Airlines exercised considerable control over his work.  While flying Korean Airlines aircraft, Mr. Hudson was required to abide by the policies and procedures listed in the employee manual he received from Korean Airlines.  See, e.g., Weber v. Commissioner, 103 T.C. 378 (finding that as the taxpayer was bound by rules determined by his principal, the principal  held sufficient control for the taxpayer to be classified as an employee).” 2017 T. C. Memo. 221, at pp. 18-19.

The GAP agreement can’t change the facts that bound Cap’n Bob to Korean Airlines’ command and control.

Moreover, since Cap’n Bob relied on the CPA GAP found for him, and consulted EW (at his usual reasonable rates), no chops for Cap’n Bob.

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