James E. Anderson and Cheryl J. Latos v. Commissioner , 123 T.C. No. 12 ( 2004 )


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    123 T.C. No. 12
    UNITED STATES TAX COURT
    JAMES E. ANDERSON AND CHERYL J. LATOS, Petitioners v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent
    Docket No. 7425-02.               Filed August 19, 2004.
    Sec. 3121(b)(20), I.R.C., classifies as self-
    employed those crew members of a fishing boat, with a
    crew of fewer than 10, who are compensated with a share
    of the boat’s catch of fish or a share of the proceeds
    from the sale of the catch if the amounts of their
    shares depend on the amount of the catch. Sec.
    31.3121(b)(20)-1(a), Employment Tax Regs., provides
    that if a crew member’s share “depends solely on the
    amount of the boat’s * * * catch of fish” (emphasis
    added), it qualifies as income from self-employment.
    During 1997, P worked as a crew member or captain
    on fishing boats with crews of fewer than five members.
    The fishing boat owners’ expenses for fuel, ice, and
    lubricating oil were subtracted from the proceeds of
    sale of the catches of fish to determine P’s
    compensatory share of the proceeds of each voyage.
    On their 1997 joint Federal income tax return, Ps
    failed to report self-employment tax on compensation P
    - 2 -
    received for working as a crew member or captain on
    small fishing boats during 1997. R determined Ps are
    liable under sec. 1401, I.R.C., for self-employment tax
    with respect to Ps’ 1997 tax year on the ground that P
    was a self-employed fishing boat worker during 1997.
    Ps argue P was an employee under sec. 3121(b)(20),
    I.R.C., on the ground that his share of proceeds of the
    catches of fish did not depend solely on the amount of
    the catch because operating expenses were subtracted in
    computing his share.
    Held: P was self-employed under sec. 3121(b)(20),
    I.R.C., because proceeds from the sale of the catches
    of fish after subtraction of operating expenses depend
    on the amount of each catch. We interpret the “depends
    solely” provision of sec. 31.3121(b)(20)-1, Employment
    Tax Regs., as excluding only additional fixed payments
    to crew members, and P did not receive any such
    payments.
    James E. Anderson and Cheryl J. Latos, pro sese.
    John Aletta, for respondent.
    OPINION
    BEGHE, Judge:   Respondent determined petitioners are liable
    under section 1401 for self-employment tax of $5,764 with respect
    to their 1997 tax year.1
    The issue for decision is whether, during 1997, James
    Anderson (petitioner) was a self-employed worker on fishing boats
    under section 3121(b)(20), making petitioners liable for self-
    1
    Unless otherwise specified, all section references are to
    the Internal Revenue Code in effect for the year at issue.
    - 3 -
    employment tax under section 1401.     We uphold respondent’s
    determination that petitioner was self-employed.
    Background
    This case is before the Court fully stipulated, and the
    facts are so found.   The stipulation of facts and the attached
    exhibits are incorporated herein by this reference.
    Petitioners were married and resided in Wood River Junction,
    Rhode Island, when they filed their petition in this case.
    During January 1997, petitioner worked as a crew member on
    the fishing boat Enterprise, and thereafter, through December
    1997, on the fishing boat Elizabeth R.     The Enterprise and
    Elizabeth R. (the boats) were owned, respectively, by Dan Barlow
    and Doug Rowell (collectively, the boat owners).     At the times
    petitioner worked on the boats during 1997, the boats had crews
    of fewer than five people.   Petitioner sometimes worked on the
    boats as captain and sometimes as a crew member.     More precisely,
    schedules computing the shares of proceeds earned by petitioner
    and the other crew members from each voyage of the Elizabeth R.
    during 1997 indicate petitioner worked as captain for only one
    voyage of the Elizabeth R.   There are no such schedules in the
    record for petitioner’s fishing voyages on the Enterprise.
    Proceeds from catches of fish during 1997 by the Enterprise
    and the Elizabeth R. were divided as follows.     The boat’s
    expenses for fuel, ice, and lubricating oil were subtracted from
    - 4 -
    the gross proceeds of the sale of the catch to determine the net
    proceeds of the voyage.   The crew members, including the captain,
    were allocated 50 percent of the net proceeds (the crew members’
    share), and the boat owner and the captain were allocated 50
    percent of the net proceeds.   The crew members, including the
    captain, shared the crew members’ share equally after subtracting
    the crew’s total expenses for food, payments to “lumpers”
    (laborers employed to help unload the catch), and other
    miscellaneous items.   When petitioner worked as captain, he
    received a crew member’s share and a percentage of the 50-percent
    share allocated to the boat owner and the captain.2
    Dapper Fisheries, Inc., and Rowell Fisheries, Inc.,3 issued
    Forms 1099-MISC, Miscellaneous Income, to petitioner reflecting
    “fishing boat proceeds” of $3,832.23 and $46,653.96 he received
    2
    The settlement sheet for the voyage of the Elizabeth R. on
    which petitioner served as captain indicates that his captain’s
    share amounted to 15 percent of the boat owner’s and captain’s
    50-percent share of the net proceeds, unreduced by expenses for
    food, payments to lumpers, and miscellaneous items. Other
    settlement sheets maintained for the Elizabeth R. indicate that
    petitioner’s crew member’s share for four voyages was charged for
    “clothing” and for one voyage was charged for “supplies.”
    3
    Although Dan Barlow and Doug Rowell owned the Enterprise
    and Elizabeth R., respectively, Dapper Fisheries, Inc., and
    Rowell Fisheries, Inc., were listed as the “payers” on the Forms
    1099-MISC, Miscellaneous Income, issued to petitioner. Whether
    the fishing boat owner’s shares and payments referred to supra
    note 2 and the text were actually received or paid by the boat
    owners or the corporations has no bearing on the outcome of this
    case.
    - 5 -
    for his work during 1997 on the Enterprise and the Elizabeth R.,
    respectively.
    Petitioner did not receive health insurance benefits4 or any
    other payments from the boat owners on account of his fishing
    activities during 1997.
    On Schedule C, Profit or Loss From Business, of their 1997
    Federal income tax return, petitioners reported gross income of
    $50,486 from petitioner’s fishing activities and claimed no
    expenses as deductions.   On Schedule A, Itemized Deductions, of
    their 1997 return, petitioners claimed unreimbursed employee
    business expenses of $4,438 and gross medical expenses of $7,137,
    which included health insurance premiums of $5,077.   Petitioners
    did not pay their reported 1997 income tax liability of $3,491.
    Petitioners also failed to report or pay self-employment tax on
    petitioner’s fishing activities.
    On May 10, 1999, petitioners filed Form 1040X, Amended U.S.
    Individual Income Tax Return, for 1997, reporting no income tax
    liability for income petitioner received from his fishing
    activities.5
    4
    We interpret this inartfully drafted stipulation to mean
    that neither the boat owners nor the corporations paid petitioner
    any additional amount to fund his payments of health insurance
    premiums.
    5
    Petitioners were the petitioners in Anderson v.
    Commissioner, 
    T.C. Memo. 2003-112
    , a case under sec. 6330
    concerning their failure to pay Federal income tax reported on
    (continued...)
    - 6 -
    During 2000 and 2001, petitioners and respondent agreed to
    extend the period of limitations on assessment of petitioners’
    1997 income tax liability to March 31, 2002, most likely to give
    respondent time to issue a technical advice memorandum (Tech.
    Adv. Mem. 2002-11-005 (Mar. 15, 2002)) relating to facts
    substantially identical to those of this case.6
    On February 12, 2002, respondent issued a statutory notice
    of deficiency to petitioners for 1997; respondent determined
    petitioners were liable for self-employment tax of $5,764 for
    compensation petitioner received from his fishing activities;
    respondent also reclassified $2,031 of petitioners’ health
    insurance premiums and all $4,438 of petitioners’ unreimbursed
    employee business expenses as business expenses reportable on
    Schedule C.7
    5
    (...continued)
    their original 1997 return. Petitioners argued that the boat
    owners’ failure to withhold 1996 and 1997 Federal income tax from
    petitioner’s wages relieved them from liability for the income
    tax. The Court, among other things, upheld respondent’s
    determination to collect by levy the income tax liability shown
    on their 1997 return. See also Anderson v. Commissioner, 
    T.C. Memo. 2000-311
    .
    6
    The technical advice memorandum generally reflected
    respondent’s position in this case. Technical advice memoranda
    are a type of private letter ruling that is not to be cited as
    precedent unless regulations so provide. Sec. 6110(k)(3). No
    regulations so provide here.
    7
    In the statutory notice, respondent determined petitioners
    are liable for self-employment tax of $6,605, which was
    thereafter reduced to $5,764 because respondent allowed
    (continued...)
    - 7 -
    Discussion
    Petitioners argue they are not liable for self-employment
    tax on the ground that petitioner was an employee of the boat
    owners or operators when he worked as a crew member or captain in
    1997.    Respondent argues petitioner was self-employed.
    Inasmuch as respondent has determined that petitioner was
    self-employed and that petitioners are liable for self-employment
    tax under section 1401, and petitioners have filed a timely
    petition with this Court, we have jurisdiction of this case.    See
    secs. 6211(a), 6213(a); Philbin v. Commissioner, 
    26 T.C. 1159
    (1956); Anderson v. Commissioner, 
    T.C. Memo. 2003-112
    ; sec.
    1.1401-1(a), Income Tax Regs.
    It seems likely respondent’s examination of petitioners’
    1997 return and amended 1997 return began after July 22, 1998,
    and that section 7491(a) would apply to the case at hand.   The
    parties do not address whether the burden of proof on the
    deficiency at issue should shift to respondent under section
    7491(a).   We need not decide that question because our decision
    on petitioners’ 1997 self-employment tax liability does not
    depend on the burden of proof.
    Section 1401 imposes a tax on self-employment income
    attributable to a taxpayer from any trade or business carried on
    7
    (...continued)
    petitioners more 1997 Schedule C expense deductions than they had
    claimed on their original return.
    - 8 -
    by the taxpayer.   Secs. 1401(a), 1402(a) and (b); sec. 1.1401-
    1(a), Income Tax Regs.    The term “trade or business” has the same
    meaning under section 1402(a), defining “net earnings from self-
    employment”, as under section 162.      Sec. 1402(c); Bot v.
    Commissioner, 
    118 T.C. 138
    , 146 (2002), affd. 
    353 F.3d 595
     (8th
    Cir. 2003).   “Trade or business” under section 162 has been
    interpreted to mean an activity conducted “with continuity and
    regularity” and with the primary purpose of making income or a
    profit.   Commissioner v. Groetzinger, 
    480 U.S. 23
    , 35 (1987); Bot
    v. Commissioner, supra.    The carrying on of a trade or business
    for purposes of self-employment tax generally does not include
    the performance of services as an employee.     Sec. 1402(c)(2);
    Robinson v. Commissioner, 
    117 T.C. 308
    , 320 (2001).
    - 9 -
    Under section 3121(b)(20),8 crew members of a fishing boat,
    8
    Sec. 3121(b) provides:
    SEC. 3121 (b). Employment.--For purposes of
    this chapter, the term “employment” means any
    service, of whatever nature, performed (A) by an
    employee for the person employing him * * *;
    except that such term shall not include --
    *    *    *     *       *   *   *
    (20) service (other than service
    described in paragraph 3(A)) performed by an
    individual on a boat engaged in catching fish
    or other forms of aquatic animal life under
    an arrangement with the owner or operator of
    such boat pursuant to which--
    (A) such individual does not
    receive any cash remuneration other
    than as provided in subparagraph
    (B) and other than cash
    remuneration
    (i) which does not exceed $100
    per trip;
    (ii) which is contingent on a
    minimum catch; and
    (iii) which is paid solely for
    additional duties (such as mate,
    engineer, or cook) for which
    additional cash remuneration is
    traditional in the industry,
    (B) such individual receives a
    share of the boat’s (or the boats’
    in the case of a fishing operation
    involving more than one boat) catch
    of fish or other forms of aquatic
    animal life or a share of the
    proceeds from the sale of such
    catch, and
    (continued...)
    - 10 -
    with a crew of fewer than 10, who are compensated with a share of
    the boat’s catch or a share of the proceeds from the sale of the
    catch are classified as self-employed.
    Petitioners argue petitioner is an employee under section
    3121(b)(20) on the ground that his share of proceeds of the catch
    of fish after subtraction of operating expenses does not depend
    solely on the amount of the catch, as provided by section
    31.3121(b)(20)-1(a), Employment Tax Regs., and the congressional
    intent underlying section 3121(b)(20).   Petitioners argue that
    Rev. Rul. 77-102, 1977-
    1 C.B. 299
    , under which petitioner would
    be regarded as self-employed, is inconsistent with the intent of
    Congress and has been revoked by section 31.3121(b)(20)-1(a),
    Employment Tax Regs.   Petitioners argue that the canon of
    statutory interpretation “expressio unius est exclusio alterius”
    precludes an exception for the subtraction of operating expenses
    from being read into section 3121(b)(20) because Congress had
    8
    (...continued)
    (C) the amount of such
    individual’s share depends on the
    amount of the boat’s (or the boats’
    in the case of a fishing operation
    involving more than one boat) catch
    of fish or other forms of aquatic
    animal life,
    but only if the operating crew of such boat (or
    each boat from which the individual receives a
    share in the case of a fishing operation involving
    more than one boat) is normally made up of fewer
    than 10 individuals * * *.
    - 11 -
    previously amended the statute to provide for the $100 cash
    payment exception under section 3121(b)(20)(A) and for no other
    exception.
    Respondent argues petitioner was self-employed under section
    3121(b)(20) because he was compensated for his services
    exclusively through a share of the proceeds from the sale of the
    catch of fish, with the amount of compensation depending on the
    amount of the catch for each voyage, according to respondent’s
    interpretation of section 3121(b)(20) and the regulation in
    accordance with the congressional intent underlying section
    3121(b)(20).   Respondent argues the Secretary did not revoke Rev.
    Rul. 77-102, supra, and that the revenue ruling is consistent
    with section 3121(b)(20) and the regulation.   Respondent argues
    that the quoted canon of statutory construction does not apply;
    the issue of statutory construction presented is not whether to
    create another exception analogous to the $100 cash payment
    exception created by section 3121(b)(20)(A), but to construe the
    original text of section 3121(b)(20) to determine whether
    subtraction of operating expenses from the proceeds of the catch
    prevents an individual’s share of the proceeds from depending on
    the amount of the catch.
    Petitioners make two other arguments, which respondent
    disputes, that we briefly address at the end of this Opinion.
    - 12 -
    To decide this case, we must answer a question of first
    impression in this Court:   whether the requirement of section
    3121(b)(20) that the individual crew member receive a share of
    the “proceeds” from the sale of the catch that “depends on the
    amount” of the boat’s catch means that only gross proceeds can
    depend on the amount of the boat’s catch, as petitioners contend,
    or that proceeds after subtraction of operating expenses can also
    depend on the amount of the catch, as respondent contends.     The
    statute, conference report and other legislative history,
    regulation and its preamble, and caselaw do not specifically
    address this question.
    As explained below, we hold petitioner was self-employed
    under section 3121(b)(20) on the ground that proceeds from the
    sale of the catch after subtraction of operating expenses depend
    on the amount of the boat’s catch.
    Respondent explicitly acknowledges in his reply brief and
    petitioners implicitly acknowledge (by recourse to and use of
    legislative history) that section 3121(b)(20) is ambiguous and
    requires interpretation.    In arriving at our interpretation, we
    examine the legislative history of section 3121(b)(20) and the
    history of commercial practices of the fishing industry, which
    were referred to in the legislative history, to understand the
    commercial context of the employment tax issue that Congress
    addressed.
    - 13 -
    We address the issue under four headings.    First, we examine
    the history of the commercial practices and employment tax
    treatment of fishing boat workers and fishing boat owners.
    Second, we interpret the requirement that an individual receive a
    share of the “proceeds” from the sale of the catch that “depends
    on the amount” of the boat’s catch.      In arriving at our
    interpretation, we examine:     (a) The general meaning of the terms
    in section 3121(b)(20) and section 31.3121(b)(20)-1(a),
    Employment Tax Regs.; (b) the legislative history and
    congressional intent underlying section 3121(b)(20) and the
    issuance of section 31.3121(b)(20)-1(a), Employment Tax Regs.;
    (c) Rev. Rul. 77-102, supra, and (d) the $100 exception in
    section 3121(b)(20)(A) and whether and how the canon of statutory
    construction “expressio unius est exclusio alterius” bears on the
    question.    Third, we apply section 3121(b)(20) to petitioner’s
    fishing activities in light of our interpretation of the statute
    and the regulation that his share of the proceeds after
    subtraction of operating expenses depended on the amount of the
    catch.     Fourth, we consider petitioners’ other arguments.
    1.   History of Compensation Arrangements for Fishing Boat Workers
    a.    The Lay System
    It has been customary in the fishing industry for fishing
    boat owners to compensate their workers under the “lay” or
    “share” system; under this system, workers on fishing boats
    - 14 -
    receive a share of the proceeds from fishing operations on a
    voyage basis rather than previously agreed-upon wages or fees.
    See, e.g., Cromwell v. Slaney, 
    65 F.2d 940
    , 941 (1st Cir. 1933);
    United States v. Laflin, 
    24 F.2d 683
    , 685 (9th Cir. 1928) (“It
    has been the maritime law [for more than 700 years] that
    agreements, by which seamen, engaged in a fishing or whaling
    voyage, are to receive for their services shares of the profits
    of the voyage, are contracts of hiring, and the shares so agreed
    upon are in the nature of wages, to recover which actions may be
    maintained after the end of the voyage.”); The Carrier Dove, 
    97 F. 111
    , 112 (1st Cir. 1899); Cape Shore Fish Co. v. United
    States, 
    165 Ct. Cl. 630
    , 638, 
    330 F.2d 961
    , 965 (1964); Brown v.
    Hicks, 
    24 F. 811
    , 812 (C.C.D. Mass. 1885) (shipmaster contracted
    with the boat owner for the “the one-fifteenth lay or share of
    the net proceeds of the cargo”).9
    9
    In Cape Shore Fish Co. v. United States, 
    165 Ct. Cl. 630
    ,
    643 n.13, 
    330 F.2d 961
    , 969 n.13 (1964), the Court of Claims
    quoted the following passage from Melville’s Moby Dick 57-58
    (Intl. Collectors Lib. ed.) regarding lays:
    “I was already aware that in the whaling business
    they paid no wages; but all hands, including the
    captain, received certain shares of the profits
    called lays, and that these lays were proportioned to
    the degree of importance pertaining to the respective
    duties of the ship’s company.”
    - 15 -
    b.   Pre-Section 3121(b)(20) Classification of Fishing Boat
    Workers
    Under the Federal Insurance Contributions Act (FICA) and
    Federal Unemployment Tax Act (FUTA), the term “employee” includes
    “any individual who, under the usual common law rules applicable
    in determining the employer-employee relationship, has the status
    of an employee”.   Secs. 3111, 3121(d)(2), 3301, 3306(i).
    To determine whether fishing boat workers were employees or
    independent contractors, courts considered the facts and
    circumstances of each boat owner/worker relationship and relied
    on a multiplicity of factors.    See Enochs v. Williams Packing &
    Navigation Co., 
    370 U.S. 1
    , 3 (1962); see also secs.
    31.3121(d)-1(c)(2), 31.3306(i)-1(b), 31.3401(c)-1(b), Employment
    Tax Regs.   The multifactor facts and circumstances analysis and
    disagreement among the courts over the application of common law
    or maritime law to determine the employment status of fishing
    boat workers led to inconsistent results,10 which made it
    difficult for boat owners to predict and determine whether their
    workers would be held to be independent contractors or employees.
    10
    See Enochs v. Williams Packing & Navigation Co., 
    370 U.S. 1
     (1962) (holding fishermen were employees); United States v.
    Crawford Packing Co., 
    330 F.2d 194
    , 196 (5th Cir. 1964) (holding
    fishermen were not employees); Cape Shore Fish Co. v. United
    States, supra (holding fishermen were employees; United States v.
    W.M. Webb, Inc., 
    402 F.2d 956
     (5th Cir. 1968) (holding fishermen
    were not employees), revd. 
    397 U.S. 179
     (1970).
    - 16 -
    In United States v. W.M. Webb, Inc., 
    397 U.S. 179
     (1970),
    the Supreme Court finally held that the employment status of
    fishing boat captains and crew members should be decided under
    maritime law.   This had the effect of increasing the likelihood
    that many fishing boat workers would be classified as employees
    for employment tax purposes.   See Marmoll, “Employment Status--
    Employee v. Independent Contractor”, 391-3rd Tax Management
    Portfolio (BNA), A-79 (2001) (citing Anderson v. United States,
    
    450 F.2d 567
     (5th Cir. 1971); Rev. Rul. 72-385, 1972-
    2 C.B. 535
    ).
    c.   1976 Version of Section 3121(b)(20)
    In 1976, Congress responded to the plight of the small
    fishing boat owners by enacting the first version of section
    3121(b)(20), with an effective date of December 31, 1971, under
    the Tax Reform Act of 1976, Pub. L. 94-455, sec. 1207(e)(1)(A)
    and (f)(4), 
    90 Stat. 1706
    , 1708.   Under the Revenue Act of 1978,
    Pub. L. 95-600, sec. 701(z)(1), 
    92 Stat. 2921
    , section
    3121(b)(20) was made retroactive to December 31, 1954.
    In explaining the genesis of section 3121(b)(20), the report
    by the Senate Committee on Finance summarized the practical
    problems that would be encountered by small fishing boat owners
    if they were required to treat their workers as employees:
    The crews that work on boats used in fishing
    * * * are frequently “pickup” crews composed of
    individuals who may work for only a few voyages, and
    sometimes even for only one voyage. * * * Thus, the
    voyage partakes more of the nature of a joint venture
    than it does of an employment situation.
    - 17 -
    Under these circumstances, it is difficult and
    impractical for the boat operator to keep the
    necessary records to calculate his tax obligations as
    an employer, and it is equally difficult for him to
    withhold the appropriate taxes for payment. * * *
    Another factor contributing to the difficulty in
    which such boat operators find themselves is the
    nature of the remuneration paid to their crewmen. In
    many cases, the crewmen are paid no regular salary,
    but instead receive a portion of the catch. In
    practice, the catch is often sold upon return to
    shore, usually by the boat operator, and each crewman
    is immediately paid a percentage of the proceeds of
    the catch that is equivalent to the portion of the
    catch for which he agreed to work. In view of the
    basic informality of these arrangements, and the
    consequent difficulty in adhering to the obligations
    required of employers by the Internal Revenue Code,
    the committee believes it appropriate to remove these
    obligations from certain small boat operators by
    treating their crewmen as self-employed individuals.
    The committee believes that this will recognize the
    basic nature of the arrangement between the boat
    operators and the crewmen since the crewmen, under
    these arrangements, should find it much simpler and
    more convenient to calculate and report their own
    income for tax purposes than do the boat operators.
    In treating these situations as instances of
    employment of crewmen by boat operators, the Internal
    Revenue Service has not only required current payment
    of employment taxes by the boat operators, but has
    also assessed these taxes retroactively for all tax
    years still open under the statute of limitations.
    As a result of possibly sizeable assessments, many
    boat operators may face bankruptcy. [S. Rept. 94-938
    (Pt. I), at 385 (1976), 1976-3 C.B. (Vol. 3) 49,
    423.]
    As alluded to in the Senate report and explained in more
    detail by the Joint Committee on Taxation in its General
    Explanation of the Revenue Act of 1976, Congress extended
    retroactive relief to small fishing boat owners to prevent
    - 18 -
    financial hardship arising from proposed tax assessments for
    prior years in cases where they had not treated their workers as
    employees.   See id.; Staff of Joint Comm. on Taxation, General
    Explanation of the Tax Reform Act of 1976, at 380-381 (J. Comm.
    Print 1976), 1976-3 C.B. (Vol. 2) 1, 392-393.11
    d.   Rev. Rul. 77-102
    Following enactment of section 3121(b)(20) in 1976, the
    Commissioner issued Rev. Rul. 77-102, 1977-
    1 C.B. 299
    , which
    explains respondent’s position in this case that proceeds after
    subtraction of operating expenses depend on the amount of the
    boat’s catch of fish under section 3121(b)(20).     In situation 1
    of Rev. Rul. 77-102, supra, the boat owner employs a captain and
    eight other crew members to perform services.     Six of the nine
    crew members receive remuneration by dividing equally 60 percent
    of the net proceeds from the sale of the catch after subtracting
    from the gross proceeds certain specified expenses such as ice
    and fuel and a payment of $25 each to the mate, engineer, and
    11
    As explained by the Joint Committee on Taxation, the
    retroactive effective date barred retroactive deficiency
    assessments against boat owners who treated fishing boat workers
    as self-employed before enactment of sec. 3121(b)(20) for past
    years still open under the statute of limitations. See Staff of
    Joint Comm. on Taxation, General Explanation of the Tax Reform
    Act of 1976, at 382 (J. Comm. Print 1976), 1976-3 C.B. (Vol. 2)
    1, 394. However, crew members treated as employees before
    enactment of sec. 3121(b)(20) were not required to pay the higher
    rate of Social Security tax required of self-employed
    individuals, nor were refunds of the employer’s share of social
    security taxes to be made to boat owners who had paid them. See
    id.
    - 19 -
    cook.     The Commissioner ruled that the 6 crew members are self-
    employed under section 3121(b)(20) because they do not receive
    any cash remuneration other than a share of the proceeds from the
    sale of the catch after subtraction of operating expenses, their
    share depends on the amount of the catch, and the operating crew
    of the boat normally consists of fewer than 10 individuals.     The
    Commissioner also ruled that the mate, the cook, and the engineer
    were employees under section 3121(b)(20) because the $25 flat fee
    compensation for services they performed at sea did “not depend
    on the amount of the boat’s catch of fish”.
    e.     Section 31.3121(b)(20)-1(a), Employment Tax Regs.
    In 1980, the Commissioner promulgated section
    31.3121(b)(20)-1(a), Employment Tax Regs., which purports to
    paraphrase section 3121(b)(20) and provides that if a crew
    member’s share “depends solely on the amount of the boat’s * * *
    catch of fish” (emphasis added), he qualifies for self-employment
    - 20 -
    status.12    See 
    45 Fed. Reg. 57122
     (Aug. 27, 1980); see also T.D.
    7716, 1980-
    2 C.B. 241
    .
    f.     Flamingo Fish Corp. v. United States
    In Flamingo Fish Corp. v. United States, 
    32 Fed. Cl. 377
    (1994), the taxpayer allocated a “per”, which is “a small
    additional sum of money * * *, usually $25 or a multiple thereof,
    12
    Sec. 31.3121(b)(20)-1(a), Employment Tax Regs., provides
    in pertinent part:
    (a) In general. (1) Service performed * * * by an
    individual on a boat engaged in catching fish * * * are
    excepted from employment if--
    (i) The individual receives a * * * a share of the
    proceeds from the sale of the [boat’s] catch [of fish],
    (ii) The amount of the individual’s share depends
    solely on the amount of the boat’s * * * catch of fish,
    (iii) The individual does not receive and is not
    entitled to receive, any cash remuneration, other than
    remuneration that is described in sub-division (1) of this
    subparagraph
    *    *    *    *    *       *   *
    (2) The requirement of subdivision (ii) is not
    satisfied if there exists an agreement with the boat’s * * *
    owner or operator by which the individual’s remuneration is
    determined partially or fully by a factor not dependent on
    the size of the catch. For example, if a boat is operated
    under a remuneration arrangement, e.g., a collective
    agreement which specifies that crew members, in addition to
    receiving a share of the catch, are entitled to an hourly
    wage for repairing nets, regardless of whether this wage is
    actually paid, then all the crew members covered by the
    arrangement are entitled to receive cash remuneration other
    than a share of the catch and their services are not
    excepted from employment by section 3121(b)(20).
    [Emphasis added.]
    - 21 -
    to the mate, cook, and engineer * * * in recognition of services
    they perform at sea, in addition to their normal duties”,
    according to a sliding scale or schedule that depended on a
    percentage of the proceeds from the catch.
    The Court of Claims held that crew members who receive pers
    are employees because per payments are flat fees that do not
    depend on the amount of a particular catch as required by section
    3121(b)(20) as originally enacted.     The Court of Claims upheld
    Rev. Rul. 77-102, supra, regarding the interpretation of the
    “pers” issue and section 31.3121(b)(20)-1(a), Employment Tax
    Regs., as reasonable interpretations of section 3121(b)(20).     The
    Court of Claims did not discuss nor was it called upon to
    consider the Commissioner’s interpretation in Rev. Rul. 77-102,
    supra, of “proceeds” as including proceeds after subtraction of
    operating expenses.
    g.   1996 Amendment of Section 3121(b)(20)
    In 1996, Congress overruled Flamingo Fish Corp. v. United
    States, supra, by adding subparagraph (A) to section 3121(b)(20),
    as part of the Small Business Job Protection Act of 1996 (SBJPA),
    Pub. L. 104-188, sec. 1116, 
    110 Stat. 1762
    .     Section 3121(b)(20)
    (A) applies to remuneration paid after December 31, 1994; it also
    applies to remuneration paid after December 31, 1984, and before
    January 1, 1995, unless the payor treated the remuneration when
    paid as subject to FICA taxes.   Under section 3121(b)(20)(A),
    - 22 -
    crew members are not employees if they receive cash payments that
    do not exceed $100 per trip, are contingent on a minimum catch,
    and are paid solely for additional duties (e.g., as mate,
    engineer, or cook) for which additional cash remuneration is
    traditional in the industry.    In so providing, section
    3121(b)(20)(A) also invalidated the part of Rev. Rul. 77-102,
    1977-
    1 C.B. 299
    , that ruled that the receipt of a per would
    disqualify a crew member from self-employment status.
    2.   Interpretation of the Requirement That Crew Members Receive a
    Share of the “Proceeds” From the Sale of the Catch That
    “Depends on the Amount” of the Catch
    The language of the statute and that of the corresponding
    regulation defining the requirements for self-employment status
    are not identical.    Section 3121(b)(20) classifies a fishing boat
    worker as self-employed if the amount of the worker’s share of
    proceeds “depends on the amount of the boat’s * * * catch of
    fish”.   (Emphasis added.)   Section 31.3121(b)(20)-1(a)(1),
    Employment Tax Regs., classifies a fishing boat worker as self-
    employed if the amount of the worker’s share of proceeds “depends
    solely on the amount of the boat’s * * * catch of fish”.
    (Emphasis added.)    Under section 31.3121(b)(20)-1(a)(2),
    Employment Tax Regs., the provision that the amount of the share
    “[depend] solely” on the amount of the catch is not satisfied if
    the fishing boat worker’s remuneration is determined “partially
    or fully” by a factor not dependent on the size of the catch.
    - 23 -
    a.   General Meaning of the Terms in Section 3121(b)(20) and
    Section 31.3121(b)(20)-1(a), Employment Tax Regs.
    The general dictionary definition of “depend” encompasses:
    1: to be contingent: a: to require something as a necessary
    condition--used with on or upon (we depend on food to keep
    us alive) (his life depends on his undergoing an operation)
    (the merit of his piece depended on the brilliant things
    which arose under his pen as he went along--Matthew Arnold)
    b: to become conditioned or based (as by subjection or
    relatedness--used with on or upon) (sciences depend on one
    another) (prices depend upon supply and demand) * * *.
    [Webster’s Third New International Dictionary 604 (1974).]
    The general dictionary definition of “solely” encompasses:
    “1:   without an associate (as a companion or assistant): singly,
    alone * * *; 2: to the exclusion of alternate or competing things
    (as persons, purposes, duties) (done solely for money) (a
    privilege granted solely to him) (rely solely on oneself).”      Id.
    at 2168.
    The general dictionary definition of “proceeds” encompasses
    “what is produced by or derived from something (as a sale,
    investment, levy, business) by way of total revenue: the total
    amount brought in: yield, returns; * * * the net profits made on
    something”.    Id. at 1807.   Black’s Law Dictionary defines
    “proceeds” as “The value of land, goods, or investments when
    converted into money; the amount of money received from a sale.
    * * * Something received upon selling, exchanging, collecting, or
    otherwise disposing of collateral.”      Black’s Law Dictionary 1242
    (8th ed. 2004).
    Black’s Law Dictionary also provides the following subentry
    - 24 -
    definition of “net proceeds” as a type of proceeds:   “The amount
    received in a transaction minus the costs of the transaction
    (such as expenses and commissions).--Also termed net balance.”
    Id.; see also id., Guide to the Dictionary, at xxiii, regarding
    subentries (“If a term has more than one sense, then the
    corresponding subentries are placed under the appropriate sense
    of that term.”).   Black’s Law Dictionary defines “profit” as “The
    excess of revenues over expenditures in a business transaction;
    gain”, which is generally synonymous with the definition of “net
    proceeds”.   Id. at 1246.
    In Phelps v. Harris, 
    101 U.S. 370
    , 380 (1879), explaining
    that lands received from the disposition of real estate fall
    under the definition of “proceeds”, the Supreme Court stated:
    “Proceeds are not necessarily money.   This is * * * a word of
    great generality.”   See Peabody Coal Co. v. Navajo Nation, 
    75 F.3d 457
    , 468 (9th Cir. 1996) (holding that Congress intended the
    term “proceeds” under the Navajo-Hopi Land Settlement Act of 1974
    to mean “all economic benefit derived from the minerals”).    The
    parties have not brought to our attention nor have we found
    through our own research any information that the term “proceeds”
    is to be interpreted restrictively under the usages of the
    fishing industry or of maritime law.   Indeed, the fishing
    industry usage that treats the terms “lays” and “profits” as
    equivalent indicates that the primary meaning of the term
    - 25 -
    “proceeds” is proceeds after subtraction of operating expenses.
    See, e.g., Atl. Mut. Ins. Co. v. Commissioner, 
    523 U.S. 382
    (1998); Hedden v. Richard, 
    149 U.S. 346
    , 348-349 (1893); Central
    Reserve Life Corp. v. Commissioner, 
    113 T.C. 231
    , 237 (1999) (it
    is appropriate to construe the meaning of section 816 of
    subchapter L of the Code, involving insurance companies, in light
    of its usage in the insurance industry, to the extent it has an
    established meaning in that industry).
    The term “proceeds”, as a “word of great generality”, see
    Phelps v. Harris, supra at 380, refers to a general class that
    encompasses a collection of all forms of proceeds, including
    gross proceeds, net proceeds, and any other property received
    from an exchange of property, etc.     As a matter of formal logic,
    proceeds from the sale of the catch of fish determined after
    subtraction of operating expenses is completely included in the
    greater class, proceeds from the sale of the catch; that is, net
    proceeds is a form of or subclass of proceeds.    See Langer, An
    Introduction to Symbolic Logic 115-118 (3d ed. 1967).
    b.   Legislative History and Congressional Intent Underlying
    Section 3121(b)(20) and the Development of Section
    31.3121(b)(20)-1(a), Employment Tax Regs.
    Petitioners argue section 3121(b)(20) precludes self-
    employment status for fishing boat workers who receive proceeds
    after subtraction of operating expenses because those operating
    expenses do not depend “solely” on the amount of the catch, as
    - 26 -
    explicitly provided by section 31.3121(b)(20)-1(a), Employment
    Tax Regs., and implicitly provided by section 3121(b)(20) itself.
    Respondent interprets the term “depends solely” in the regulation
    to mean that section 3121(b)(20) excludes from “employment”
    services performed for any additional payment that does not
    depend on the amount of the catch.       Respondent interprets the
    term “proceeds” to include proceeds after subtraction of
    operating expenses.    We agree with respondent.
    Statutory construction begins with the language of the
    relevant statute.     Consumer Prod. Safety Commn. v. GTE Sylvania,
    Inc., 
    447 U.S. 102
    , 108 (1980); Fincher v. Commissioner, 
    105 T.C. 126
    , 133-134 (1995).    We may use legislative history to clarify
    an ambiguous statute.     Patterson v. Shumate, 
    504 U.S. 753
    , 761
    (1992); Canada Life Assurance Co. v. Converium Ruckversicherung
    (Deutschland) AG, 
    335 F.3d 52
    , 57 (2d Cir. 2003); Fincher v.
    Commissioner, supra; City of New York v. Commissioner, 
    103 T.C. 481
    , 489 (1994), affd. 
    70 F.3d 142
     (D.C. Cir. 1995).       When a
    statute is ambiguous, the Court must find the interpretation that
    can most fairly be said to be embedded in the statute, in the
    sense of being most harmonious with its scheme and with the
    general purposes that Congress manifested.       NLRB v. Lion Oil Co.,
    
    352 U.S. 282
    , 297 (1957).    Reports by the Senate Committee on
    Finance are an authoritative source for legislative intent.
    Thornburg v. Gingles, 
    478 U.S. 30
    , 44 (1986); Garcia v. United
    - 27 -
    States, 
    469 U.S. 70
    , 76 (1984).
    Because the Secretary promulgated section 31.3121(b)(20)-1,
    Employment Tax Regs., under his general authority to “prescribe
    all needful rules and regulations”, see sec. 7805(a), the Court
    owes “the interpretation less deference than a regulation issued
    under a specific grant of authority to define a statutory term or
    prescribe a method of executing a statutory provision”, see Rowan
    Cos. v. United States, 
    452 U.S. 247
    , 253 (1981).      We defer to the
    Secretary’s regulatory interpretation of the Code so long as it
    is reasonable.     Cottage Sav. Association v. Commissioner, 
    499 U.S. 554
    , 560-561 (1991); Natl. Muffler Dealers Association, Inc.
    v. United States, 
    440 U.S. 472
    , 476-477 (1979).      In determining
    whether a particular regulation carries out the congressional
    mandate in a proper manner, we look to see whether the regulation
    harmonizes with the plain language of the statute, its origin,
    and its purpose.     Natl. Muffler Dealers Association, Inc. v.
    United States, supra at 477.     A regulation may have particular
    force if it is a substantially contemporaneous construction of
    the statute by those presumed to have been aware of congressional
    intent.   Id.    If the regulation dates from a later period, the
    manner in which it evolved merits inquiry.     Id.   Other relevant
    considerations are the length of time the regulation has been in
    effect, the reliance placed on it, the consistency of the
    Commissioner’s interpretation, and the degree of scrutiny
    - 28 -
    Congress has devoted to the regulation during subsequent
    reenactments of the statute.   Id.
    The language of the statute and the regulation is far from
    clear.   The dictionary definition of “depend” encompasses “to
    require something as a necessary condition” with the example
    “prices depend on supply and demand”.     Webster’s Third New
    International Dictionary 604 (1974).     In this example, “prices”
    depend on two factors, “supply” and “demand”, and so cannot
    depend “solely” on either of them.      Section 3121(b)(20) does not
    use the word “solely”, which implies that the amount of the catch
    is a necessary, but not exclusive, factor upon which the proceeds
    must depend.   The use of “solely” in section 31.3121(b)(20)-1,
    Employment Tax Regs., suggests that proceeds must depend only on
    the amount of the catch “to the exclusion of alternate or
    competing” factors such as operating expenses.     The definition of
    “proceeds” encompasses proceeds after subtraction of operating
    expenses.   See Webster’s Third New International Dictionary 1807
    (1974); Black’s Law Dictionary 1242 (8th ed. 2004).
    Logically speaking, uncritically applying the dictionary
    definitions of these terms to the statute and the regulation
    would lead to contradictory results.     Because the statute is
    ambiguous, we may use legislative history, see Patterson v.
    Shumate, 
    supra at 761
    ; Fincher v. Commissioner, supra at 133-134,
    to find the interpretation that can most fairly be said to be
    - 29 -
    embedded in the statute, in the sense of being most harmonious
    with its scheme and with the general purposes that Congress
    manifested, see NLRB v. Lion Oil Co., supra at 297.13
    Taken as a whole, the history of the fishing industry, the
    legislative history underlying section 3121(b)(20), the preamble
    to and the example in the regulation, and a logical and practical
    interpretation of the statute suggest that Congress, in enacting
    section 3121(b)(20), intended that proceeds after subtraction of
    operating expenses depend on the amount of the catch.   We do not
    interpret the “depends solely” provision of section
    31.3121(b)(20)-1, Employment Tax Regs., as precluding subtraction
    of operating expenses from proceeds.
    For several centuries, fishing boat crew members working
    under the “lay” system have, for the most part, received a share
    of profits from the sale of the catch, or excess of revenues over
    expenses, which is synonymous with “net proceeds”, rather than a
    13
    Where the statutory language appears clear, we would
    require unequivocal evidence of legislative purpose before
    construing the statute so as to override the plain meaning of the
    words used therein, see United States v. Am. Trucking
    Associations, 
    310 U.S. 534
    , 543-544 (1940); Huntsberry v.
    Commissioner, 
    83 T.C. 742
    , 747-748 (1984), particularly where we
    have a complex set of statutory provisions marked by a high
    degree of specificity, see Huntsberry v. Commissioner, supra at
    748; cf. Occidental Petroleum Corp. v. United States, 
    231 Ct. Cl. 334
    , 
    685 F.2d 1346
    , 1348 (1982). The statutory language of sec.
    3121(b)(20) and the regulation is not clear. Sec. 3121(b)(20) is
    not a statute with a complex set of provisions marked by a high
    degree of specificity. Even if the statute were clear, the
    legislative history does not necessarily provide unequivocal
    evidence of legislative purpose.
    - 30 -
    share of the gross proceeds or a share of the fish themselves.
    See, e.g., Thomas v. Osborn, 
    60 U.S. 22
    , 29-30 (1856) (“a
    lay--that is, a participation in profits”); Putnam v. Lower, 
    236 F.2d 561
    , 573 n.2 (9th Cir. 1956) (“the word ‘lay’ means a share
    of the profits of a venture given in lieu of wages”); Old Point
    Fish Co. v. Haywood, 
    109 F.2d 703
     (4th Cir. 1940).14
    The report by the Senate Committee on Finance indicates
    Congress recognized longstanding industry practices of paying
    fishing boat workers on the lay system with a share of the
    proceeds from the catch after subtraction of operating expenses.
    See S. Rept. 94-938 (Pt. I), supra at 384-385, 1976-3 C.B. (Vol.
    3) at 422-423.   Section 3121(b)(20) was enacted to provide
    administrative convenience and certainty to fishing boat owners
    by eliminating the need to keep records to calculate tax
    obligations of fishing boat workers who received payments on the
    lay system, without interfering with or changing the longstanding
    lay system of compensation.   See id. at 385-386, 1976-3 C.B.
    (Vol. 3) at 423-424.
    Compensation under the lay system necessarily means that the
    proceeds of the catch depend on factors other than the amount of
    the catch, including, but not limited to, the subtraction of
    14
    Black’s Law Dictionary 905 (8th ed. 2004) defines “lay” in
    the context of maritime law as: “A share of the profits of a
    fishing or whaling trip, akin to wages, allotted to the officers
    and seamen.”
    - 31 -
    operating expenses.    We do not believe that Congress, in enacting
    section 3121(b)(20) to help fishing boat owners avoid financial
    hardship and employment tax record-keeping requirements, intended
    to limit the beneficial effects of section 3121(b)(20) by
    conferring self-employment status only on fishing boat crew
    members who receive a share of proceeds with no subtraction of
    operating expenses.    To hold otherwise would classify as
    employees a majority of crew members, who, under the lay system,
    usually receive a share of proceeds after subtraction of
    operating expenses.
    Because we are a court with national jurisdiction over
    litigation involving the interpretation of the Federal tax
    statutes, see Lardas v. Commissioner, 
    99 T.C. 490
     (1992),
    adopting petitioners’ interpretation of section 3121(b)(20) would
    throw the small boat fishing industry into turmoil and create
    financial hardship for the owners.
    Assuming as we do that most, if not all, small fishing boat
    owners have not filed Forms 940 and 941 to report and pay FUTA
    and FICA taxes for fishing boat workers who received proceeds
    from sales of catches after subtraction of operating expenses,
    the periods of limitation for assessments of those taxes would
    not have expired.     Secs. 6501(a), 6503(a)(1), 6213.   Our adoption
    of petitioners’ interpretation of section 3121(b)(20) could be
    applied retroactively to assess employment taxes for previous tax
    - 32 -
    years in cases where boat owners treated as self-employed their
    workers who received a share of proceeds after subtraction of
    operating expenses as determined under the lay system.   See S.
    Rept. 94-938, (Pt. I), supra at 385-386, 1976-3 C.B. (Vol. 3) at
    423-424; Staff of Joint Comm. on Taxation, General Explanation of
    the Tax Reform Act of 1976, supra at 380-381, 1976-3 C.B. (Vol.
    2) at 392-393.15   Any retroactive assessments would rewrite the
    compensation bargains entered into by fishing boat owners and
    operators with the workers in reliance on the applicability of
    section 3121(b)(20).   Such assessments would create substantial
    financial hardship to the small fishing boat owners and a
    windfall to the workers, thereby frustrating the intent of
    Congress in enacting section 3121(b)(20).   Even if respondent
    would appeal an adverse decision of this Court and suspend
    efforts to collect employment taxes from the small fishing boat
    owners, they would have contingent liabilities on their balance
    sheets that could interfere with their ability to obtain loans or
    sell their businesses.
    15
    Under sec. 530 of the Revenue Act of 1978, Pub. L. 95-600,
    
    92 Stat. 2885
    , fishing boat owners who erroneously classified
    employees as self-employed might be relieved of employment tax
    liability, and fishing boat workers, including petitioner, would
    be deemed not to be employees of the owners for employment tax
    purposes, if certain conditions were satisfied. See Joseph M.
    Grey Pub. Accountant, P.C. v. Commissioner, 
    119 T.C. 121
    , 130
    (2002), affd. 
    93 Fed. Appx. 473
     (3d Cir. 2004). There is no
    record evidence whether the requirements of sec. 530 of the
    Revenue Act of 1978 would be applicable in the case at hand to
    relieve the boat owners of employment tax liabilities.
    - 33 -
    In enacting section 3121(b)(20), Congress stated that the
    relationship of the small fishing boat owners with “pickup” crews
    who share in the proceeds from the catch is more similar to a
    joint venture than to an employment arrangement.      Generally, a
    partnership is synonymous with a joint venture.      See secs.
    761(a), 7701(a)(2).   A partnership generally requires a community
    of interest in profits and losses.       See Commissioner v. Tower,
    
    327 U.S. 280
    , 287-288 (1946).    Historically, crew members who
    work on the lay system have shared in the “profits” of the
    voyage.   The partnership/joint venture analogy suggests Congress
    intended the term “share of the proceeds of the catch” to include
    proceeds after subtraction of operating expenses.16
    Even though petitioners have a seemingly plausible argument
    that the “depends solely” provision of section 31.3121(b)(20)-
    1(a)(2), Employment Tax Regs., is not satisfied if the share is
    reduced by operating expenses, we interpret the “depends solely”
    provision to mean that section 3121(b)(20) excludes from
    “employment” services performed for any additional payment,
    16
    An unsuccessful fishing trip is known in the fishing trade
    as a “broker”. See The Dirigo First, 
    60 F. Supp. 675
    , 675-676
    (D. Mass. 1945) (“If no fish is caught or for some other reason
    there are no proceeds from a fish auction, the voyage is called
    ‘a broker’. * * * the members of the crew go unpaid, unless the
    owner or master chooses to make a gratuitous distribution”);
    O’Hara Vessels, Inc. v. Hassett, 
    60 F. Supp. 672
     (D. Mass. 1942).
    The broker situation suggests the lay system is similar to a
    joint venture because the fishing boat workers risk the loss of
    labor, time, and possibly other personal expenses.
    - 34 -
    whether or not made from the proceeds of the catch, that is fixed
    in amount or calculated on an hourly or minimum basis or other
    manner unrelated to the amount of the catch.
    Section 31.3121(b)(20)-1(a)(2), Employment Tax Regs.,
    provides the following example of remuneration determined
    “partially or fully” by a factor not dependent on the size of the
    catch:
    For example, if a boat is operated under a
    remuneration arrangement, e.g., a collective
    agreement which specifies that crew members, in
    addition to receiving a share of the catch, are
    entitled to an hourly wage for repairing nets,
    regardless of whether this wage is actually paid,
    then all crew members covered by the arrangement are
    entitled to receive cash remuneration other than a
    share of the catch and their services are not
    excepted from employment by section 3121(b)(20).
    [Emphasis added.]
    The preamble to the regulation states:
    In order for a crewman to be considered self-employed
    * * * The crew member must receive in payment for his
    services a fixed share * * * of the proceeds from the
    sale of the catch and he must be entitled to no other
    cash or property independent of the size of the
    catch; * * * The amount of the crew member’s share
    must depend solely on the amount of the boat’s catch,
    and therefore the amount of the share cannot be fixed
    at any minimum (in dollars or weight) * * *.
    *    *    *     *      *   *   *
    The regulation explicitly states that a crewman’s
    share is not dependent solely on the amount of the
    boat’s catch if the crewman is entitled under any
    individual or collective agreement to any fee, hourly
    wage, minimum for services, or any other amount
    unrelated to the size of the catch. * * * [
    45 Fed. Reg. 57122
     (Aug. 27, 1980).]
    - 35 -
    We observe that an interpretation that the word “solely”
    excludes subtraction of operating expenses would not harmonize
    with the origin, intent, and purpose of the statute to help the
    small boat fishing industry.   See Natl. Muffler Dealers
    Association, Inc. v. United States, 
    440 U.S. at 477
    .    We do not
    interpret the regulation more strictly than section 3121(b)(20)
    itself.   Section 3121(b)(20) does not mention “solely”.   The
    regulation was not promulgated substantially contemporaneously
    with section 3121(b)(20); it was promulgated in 1980, 4 years
    after the statute.   The regulation has not been amended to
    reflect the enactment of section 3121(b)(20)(A) in 1996, which
    overruled Flamingo Fish Corp. v. United States, 
    32 Fed. Cl. 377
    (1994), and allowed payments of $100 pers.
    The purpose underlying the regulation and the use of the
    word “solely” in the preamble is to preclude self-employment
    status for crew members who receive additional remuneration for
    services in the form of “any fee, hourly wage, minimum for
    services,” or “other cash or property independent of the size of
    the catch”.   (Emphasis added.)   We also observe, consistently
    with our comment in the last sentence of section 2.a. of this
    Opinion, citing Langer’s An Introduction to Symbolic Logic, that
    proceeds after subtraction of operating expenses is a subclass of
    proceeds and that operating expenses that reduce the proceeds
    differ from the disqualifying additional payments referred to in
    - 36 -
    the regulation.    Because the preamble, the regulation, and the
    example specify the effects of “solely” on additional
    remuneration paid to crew members, the effect of “solely” on
    other factors, including subtraction of operating expenses, is
    properly excluded.
    The stipulation of facts, including the schedules computing
    the proceeds earned by petitioner and the other crew members from
    each of the voyages of the Elizabeth R., indicates that the crew
    members’ share was charged for operating expenses at three
    different levels.    For every voyage, the proceeds subject to
    allocation between the crew members and the fishing boat owner
    and captain were reduced by two or three of fuel, ice, and
    lubricating oil.     For every voyage, the crew members’ 50-percent
    share was reduced by one or more of payments to lumpers and for
    food, and on one occasion for “miscellaneous”.    For four voyages,
    petitioner’s individual crew member’s share was charged for
    “clothing”, and for one voyage, he was charged for unspecified
    “supplies”.
    In our view, each of these types of charges, at whatever
    level incurred and subtracted, does not change the character of
    the share of proceeds that petitioner received as depending
    “solely” on the amount of the boat’s catch of fish within the
    meaning of section 3121(b)(20) and section 31.3121(b)(20)-
    1(a)(2), Employment Tax Regs.    Notwithstanding that none of these
    - 37 -
    expenses depend on the amount of the catch, the share of proceeds
    of the catch that remains after subtraction of these expenses
    consists solely of proceeds of the catch.    The subtraction of
    operating expenses does not constitute additional or fixed
    compensation.   The crew members’ share in the profits from each
    catch does not depend partially or fully on any factor other than
    the amount of the catch within the meaning of the statute and the
    regulation.
    The Senate Committee on Finance stated that the catch is
    sold upon return to shore and each crewman is “immediately” paid
    a percentage of the proceeds from the catch.    Petitioners argue
    that Congress, in using the word “immediately”, intended that the
    fishing boat workers receive their share of the proceeds
    immediately after the sale of the catch without delay for
    subtraction of operating expenses.     We disagree with petitioners’
    argument.   The word “immediately” does not preclude a quick
    computation to subtract the amount of previously incurred
    operating expenses.
    c.   Rev. Rul. 77-102 and Section 31.3121(b)(20)-1,
    Employment Tax Regs.
    In Rev. Rul. 77-102, 1977-
    1 C.B. 299
    , the Commissioner ruled
    that crew members were self-employed even though they received a
    share of the proceeds after subtraction of operating expenses.
    Petitioners argue we should give little weight to Rev. Rul. 77-
    102, supra, because the Secretary superseded or revoked it by
    - 38 -
    failing to mention subtraction of operating expenses in
    promulgating section 31.3121(b)(20)-1, Employment Tax Regs.,
    thereby making Rev. Rul. 77-102, supra, inconsistent with the
    regulation.
    Even though revenue rulings do not have the force of law
    and are merely statements of the Commissioner’s litigating and
    administrative position, Dixon v. United States, 
    381 U.S. 68
    , 73
    (1965), such rulings constitute a body of experience and informed
    judgment to which courts may properly resort for guidance in the
    interpretation of revenue statutes and regulations, Skidmore v.
    Swift & Co., 
    323 U.S. 134
    , 140 (1944); Esden v. Bank of Boston,
    
    229 F.3d 154
    , 169 n.19 (2d Cir. 2000); Gordon v. Commissioner, 
    88 T.C. 630
    , 636 n.3 (1987).
    As it pertains to the subtraction of operating expenses,
    Rev. Rul. 77-102, supra, has been relied upon and followed by the
    industry for more than 27 years without any substantial change.
    During the last 27 years, neither Congress nor the Secretary took
    advantage of the opportunity to invalidate Rev. Rul. 77-102,
    supra.   There has been no announcement that the revenue ruling
    has fallen into desuetude or has been revoked, modified, or
    invalidated by section 3121(b)(20), section 31.3121(b)(20)-1,
    Employment Tax Regs., or a new revenue ruling.   See Auto. Club of
    Mich. v. Commissioner, 
    353 U.S. 180
    , 184 (1957); cf. Rauenhorst
    v. Commissioner, 
    119 T.C. 157
    , 170 (2002).   Indeed, the
    - 39 -
    Commissioner continued to rely on Rev. Rul. 77-102, supra, in
    issuing Tech. Adv. Mem. 2002-11-005 (Mar. 15, 2002) relating to
    facts substantially identical to those of this case.   See, e.g.,
    Rauenhorst v. Commissioner, supra at 170.   The fact that the
    regulation was promulgated after the revenue ruling suggests the
    Commissioner intended that section 31.3121(b)(20)-1(a)(2),
    Employment Tax Regs., be consistent with Rev. Rul. 77-102, supra.
    See Natl. Muffler Dealers Association v. United States, 
    440 U.S. at 477
    ; Peninsula Steel Prod. & Equip. Co. v. Commissioner, 
    78 T.C. 1029
     (1982).
    As it pertains to the subtraction of operating expenses, we
    find Rev. Rul. 77-102, supra, is a reasonable interpretation of
    the terms “depends” and “proceeds” in the statute and the
    regulation.   We find no significance in the failure of section
    31.3121(b)(20)-1, Employment Tax Regs., to mention the
    subtraction of operating expenses.
    d.   Section 3121(b)(20)(A) and the Canon “Expressio Unius
    Est Exclusio Alterius”
    Under section 3121(b)(20)(A), crew members are not employees
    if they receive cash payments that do not exceed $100 per trip,
    are contingent on a minimum catch, and are paid solely for
    additional duties (e.g., as mate, engineer, or cook) for which
    additional cash remuneration is traditional in the industry.
    Under the canon of construction “expressio unius est
    exclusio alterius”, if a statute specifies certain exceptions to
    - 40 -
    a general rule, an intention to exclude any further exceptions
    may be inferred.   See Catterall v. Commissioner, 
    68 T.C. 413
    , 421
    (1977), affd. sub nom. Vorbleski v. Commissioner, 
    589 F.2d 123
    (3d Cir. 1978); see also Black’s Law Dictionary 581 (6th Ed.
    1990) (“if [sic] statute specifies one exception to a general
    rule or assumes to specify the effects of a certain provision,
    other exceptions or effects are excluded”).   Petitioners argue
    that allowing for subtraction of operating expenses would
    constitute an exception to section 3121(b)(20) that Congress
    specifically precluded by enacting the $100 cash payment
    exception of section 3121(b)(20)(A).
    The canon “expressio unius est exclusio alterius” does not
    apply to every statutory listing or grouping; the canon applies
    only when the statute identifies “a series of two or more terms
    or things that should be understood to go hand in hand,” thus
    raising the inference that a similar unlisted term was
    deliberately excluded.   Chevron U.S.A., Inc. v. Echazabal, 
    536 U.S. 73
    , 81 (2002); United States v. City of New York, 
    359 F.3d 83
    , 98 (2d Cir. 2004).   The canon can never override clear and
    contrary evidences of congressional intent.   Neuberger v.
    Commissioner, 
    311 U.S. 83
    , 88 (1940).
    In enacting section 3121(b)(20)(A), Congress was focused on
    “additional cash remuneration” that is “traditional in the
    industry” and is “contingent on a minimum catch” but does not
    - 41 -
    necessarily depend on the amount of the catch.   See sec.
    3121(b)(20(A) (emphasis added); SBJPA sec. 1116, 
    110 Stat. 1452
    ,
    1762, 1996-
    3 C.B. 1
    , 931; S. Rept. 104-281, at 10 (1996).
    Congress added section 3121(b)(20)(A) to conform to the reality
    of longstanding fishing industry practices that allowed pers to
    be paid to the mate, the cook, and the engineer.   See S. Rept.
    104-281, supra at 10 (stating that the $100 exception would
    recognize longstanding industry practice).
    The issue of statutory interpretation presented is not
    whether to create another exception analogous to section
    3121(b)(20)(A), but to interpret the original text of section
    3121(b)(20) to determine whether subtraction of operating
    expenses from the proceeds of the catch prevents an individual’s
    share of the proceeds from depending on the amount of the catch.
    The operating expenses are fixed expenses subtracted from
    the proceeds of the catch, whereas the $100 payment exception
    applies to additional remuneration.   The $100 cash payment
    exception and the subtraction of operating expenses are so
    unrelated and dissimilar that there is no inference or
    implication that Congress intended, by injecting the $100 payment
    exception for pers under section 3121(b)(20)(A), to exclude the
    reduction of proceeds by operating expenses that was embedded in
    the statute as originally enacted.    See Chevron U.S.A., Inc., v.
    - 42 -
    Echazabal, 
    supra at 81
    ; United States v. City of New York, supra
    at 98.
    3.   Application of Section 3121(b)(20) in Light of Our
    Interpretation of the Statute and the Regulation
    We hold petitioner was self-employed under section
    3121(b)(20) when he worked as a captain or crew member of the
    fishing boats in 1997.
    Petitioner was self-employed in his capacity as a crew
    member because as a crew member he received a share of 50 percent
    of the proceeds from the catch.   Petitioner was self-employed in
    his capacity as captain because he received a crew member’s share
    and a percentage of the 50-percent of proceeds allocated to the
    boat owner and captain.
    Even though petitioner was self-employed in 1997,
    petitioners failed to report or pay self-employment tax for
    petitioner’s fishing activities as required by section 1401.
    In the statutory notice, respondent correctly reclassified
    $2,031 (40 percent of $5,077) of petitioners’ claimed health
    insurance premiums as business expenses reportable on Schedule C,
    see sec. 162(l), and all $4,438 of petitioners’ unreimbursed
    employee business expenses as business expenses reportable on
    Schedule C, see sec. 162(a).
    We hold petitioners are liable under section 1401 for the
    self-employment tax liability in the amount determined by
    - 43 -
    respondent in the statutory notice, which properly takes into
    account respondent’s adjustments.
    4. Petitioners’ Other Arguments
    a. Section 6050A
    Section 6050A(a) provides, in pertinent part, that the
    operator of a boat on which one or more individuals perform
    services described in section 3121(b)(20) is required to submit
    to the Secretary information regarding the identity of each
    fishing boat worker if the worker receives a share of the
    proceeds of the catch of fish, the amount so received, and any
    cash remuneration described in section 3121(b)(20)(A).
    Petitioners argue that the Forms 1099-MISC do not require
    boat owners to report the percentage of each fishing boat
    worker’s share of the proceeds, thereby preventing the boat
    owners from satisfying the requirements of section 6050A.
    Petitioners misread section 6050A.     Although section 6050A(a)(2)
    does require fishing boat owners to report the percentage of the
    catch of fish if the worker receives a share of the actual fish,
    all that section 6050A(a)(4) requires, if the fishing boat worker
    receives a share of the proceeds from the catch, is that the
    fishing boat owner report the amount of cash proceeds received by
    the worker, not the percentage of the proceeds after sale of the
    catch.   There is no provision under section 6050A that precludes
    - 44 -
    the fishing boat owner from subtracting operating expenses before
    distributing the shares of proceeds.
    b.   Our Prior Opinion in Anderson v. Commissioner
    Petitioners were the petitioners in Anderson v.
    Commissioner, 
    T.C. Memo. 2003-112
    , a case that concerned the
    collection of petitioners’ outstanding self-employment tax
    liability for 1995 and income tax liabilities for 1996 through
    1997 under section 6330.   The Court found the Appeals officer at
    the section 6330 hearing did not abuse his discretion in refusing
    to consider petitioners’ attempt to contest the underlying merits
    of their 1995 self-employment tax liability.    The Court rejected
    their argument that they were not liable for 1996 and 1997 income
    tax because the fishing boat owners failed to withhold the tax.
    The Court noted that section 3121(b)(20) does not obviate their
    obligation to pay income tax.
    In their answering brief, petitioners argue that Anderson
    “repudiates the requirements of section 6330” and “disavows the
    statutory scheme for the collection of employee taxes” because
    the Court did not find abuse of discretion in the Commissioner’s
    refusal to consider the merits of their 1995 self-employment tax
    liability.
    Petitioners’ argument is confusing and unpersuasive.
    Suffice it to say:   the proper forum for review of our decision
    in Anderson was the Court of Appeals;    petitioners’ 1995 tax year
    - 45 -
    is not properly before the Court in this case; petitioners’
    argument is not relevant to determine petitioner’s self-
    employment status at issue in this case because petitioners did
    not file this case under section 6330 and respondent has not yet
    sought to collect petitioners’ 1997 self-employment tax
    liability.   We observe in conclusion, however, that nothing we
    say or do in the case at hand has any negative impact on the
    ultimate collectibility of the deficiency resulting from our
    determination.
    To reflect the foregoing,
    Decision will be entered
    for respondent.