COUVILLION, Special Trial Judge: This case was heard pursuant to section 7463 in effect when the petition was filed. ¹ The decision to be entered is not reviewable by any other court, and this opinion should not be cited as authority.

Respondent determined a deficiency of $ 11,746 in petitioners' Federal income tax for the year 2000 and the accuracy-related penalty under section 6662(a) in the amount of $ 2,298.

The issues for decision are: (1) Whether, for the year at issue, Michael Allen Byer (petitioner) was a statutory employee as a full- time life insurance salesman under2006 Tax Ct. Summary LEXIS 27">*28 section 3121(d)(3)(B) and section 31.3121(d)-1(d)(3)(ii), Employment Tax Regs.; (2) whether petitioners are entitled to deductions for disallowed trade or business expenses incurred in connection with petitioner's insurance activity; and (3) whether petitioners are liable for the section 6662(a) accuracy- related penalty for the year at issue. ²

2006 Tax Ct. Summary LEXIS 27">*29 Some of the facts were stipulated. Those facts, with the exhibits annexed thereto, are so found and made part hereof. Petitioners' legal residence at the time the petition was filed was Vancouver, Washington.

Petitioner is an attorney who has a master of laws degree in taxation and was previously employed as an auditor by the IRS from 1987 to 1999. From January 1999 through April 15, 2002 (which includes the year at issue), petitioner was engaged in an income- producing activity with Corben Financial Services (Corben) of Lake Oswego, Oregon. The nature of petitioner's income from Corben and the nature of his activity is the principal issue in this case. After termination of his affiliation with Corben in April 2002, petitioner became a truck driver, driving what he described at trial as "an 18- wheeler".

Corben, from which petitioner earned income during the year at issue, was in the trade or business of selling insurance, primarily life insurance. Corben represented several life insurance companies, and the employees and/or agents of Corben were engaged in selling insurance that would meet the needs of its customers. Corben, through its agents or employees, conducted workshops, 2006 Tax Ct. Summary LEXIS 27">*30 seminars, and marketing campaigns designed to promote the sale of insurance. Petitioner was one of Corben's agents or employees and participated in these sale and marketing activities.

For the year at issue, petitioners filed a joint Federal income tax return, on which they reported no salary or wage income, but, on a Schedule C, Profit or Loss From Business, they reported petitioner's income and expenses from Corben as follows:

Gross receipts or sales (gross income)            $ 61,100

Expenses:

   Advertising              $ 3,014

   Bad debts                2,010

   Car and truck expenses         14,046

   Insurance                1,550

   Legal and professional          876

   Repairs and maintenance         1,845

   Supplies                2,310

   Taxes and licenses            850

   Travel                 4,295

   Meals and entertainment (net)      3,617

   Utilities         2006 Tax Ct. Summary LEXIS 27">*31         810

   Other expenses             7,599

     Net profit            _______        (42,822)

                              _________

                              $  18,278

Petitioners did not include with their return a Schedule SE, Self-Employment Tax, for self-employment tax that would ordinarily be due on the $ 18,278 in net profit. In the notice of deficiency, respondent determined self-employment tax on that income and disallowed deductions for some of the claimed expenses.

As described above, all of the gross income on petitioners' Schedule C was the compensation petitioner received from Corben. Petitioners contend that they are not liable for self-employment tax on the net earnings from Corben for the reason that petitioner was a statutory employee of Corben, a position that respondent does not agree with, thus framing the principal issue before the Court.

Respondent contends that petitioner was not a statutory employee but was engaged in a self-employed trade or2006 Tax Ct. Summary LEXIS 27">*32 business activity. Accordingly, respondent determined that, after adjustments to the claimed expenses, the net income from the activity was subject to self-employment tax under section 1401. Corben did not consider petitioner to be an employee and, therefore, withheld no income tax and paid no Social Security taxes on the compensation paid to petitioner.

Adjusted gross income generally consists of gross income less trade or business expenses, except in the case of the performance of services by an employee, generally referred to as a common law employee. Sec. 62. An individual performing services as a common law employee deducts such expenses as miscellaneous itemized deductions incurred in the performance of services as an employee but only to the extent the expenses exceed 2 percent of the employee's adjusted gross income. Sec. 67(a). A statutory employee, on the other hand, pursuant to rulings by the Commissioner, is not an employee for purposes of sections 62 and 67, and, therefore, a statutory employee under section 3121(d)(3) is not subject to the section 67(a) 2- percent limitation for expenses incurred by such employee in the performance of services as an employee. Rev. Rul. 90-93, 1990-2 C.B. 33.2006 Tax Ct. Summary LEXIS 27">*33 Thus, an individual who is a statutory employee under section 3121(d)(3) is allowed to deduct expenses from gross income that otherwise would be subject to the 2-percent limitation of section 67(a).

An employee for employment tax purposes is defined in pertinent part by section 3121(d) as follows:

   SEC. 3121(d). Employee. -- For purposes of this chapter, the

   term "employee" means --

     (1) any officer of a corporation; or

     (2) any individual who, under the usual common law rules

     applicable in determining the employer-employee

     relationship, has the status of an employee; or

     (3) any individual (other than an individual who is an

     employee under paragraph (1) or (2)) who performs services

     for remuneration for any person --

           *   *   *   *   *   *   *

        (B) as a full-time life insurance salesman;

For purposes of section 3121(d)(3)(B), section 31.3121(d) 1(d)(3)(ii), Employment Tax Regs., defines a "full-time life insurance salesman" as:

   An individual whose entire or principal2006 Tax Ct. Summary LEXIS 27">*34 business activity

   is devoted to the solicitation of life insurance or annuity

   contracts, or both, primarily for one life insurance

   company is a full-time life insurance salesman. * * * An

   individual who is engaged in the general insurance business

   under a contract or contracts of service which do not

   contemplate that the individual's principal business

   activity will be the solicitation of life insurance or annuity

   contracts, or both, for one company, or any individual

   who devotes only part time to the solicitation of life insurance

   contracts, including annuity contracts, and is principally

   engaged in other endeavors, is not a full-time life insurance

   salesman. [Emphasis added.]

Accordingly, under the foregoing regulation, a full-time life insurance salesman is an individual who principally sells life insurance and annuity contracts for one insurer. Whether an individual taxpayer satisfies this standard "depends upon the facts of the particular situation." Sec. 31.3121(d)-1(d)(2), Employment Tax Regs.

In this case, the facts are not in dispute. At trial, petitioner named at least six2006 Tax Ct. Summary LEXIS 27">*35 insurance companies from which he placed insurance for clients, based upon their individual needs. Additionally, the parties at trial stipulated a statement from the chief executive officer of Corben addressed to a tax compliance officer of the IRS regarding petitioner's status with Corben. That statement, in pertinent part, stated:

   Michael Byer never was a salaried employee, therefore there are

   no W2 forms. As for his 1099's for 2000, 2001, and 2002, he and

   his CPA should be able to provide those for you. We never had an

   employment agreement with Michael. He was only paid commissions

   that resulted from life insurance sales with which he was

   involved.

   Mr. Byer was hired in December 1998, starting in our office

   January 1999. We were impressed with his insurance knowledge and

   his tax knowledge. I felt this would help our firm with life

   insurance sales. Mr. Byer held a valid life insurance license

   required by law and necessary for this position with The Corben

   Institute. We sell life insurance; it's our only source of

   income.

   Michael was a life insurance agent but2006 Tax Ct. Summary LEXIS 27">*36 was required to help with

   our marketing campaigns. He assisted us with developing our

   materials, such as brochures and presentations. He used his

   legal and tax knowledge to get clients and their financial

   advisors to meet with our agency.

   As I mentioned in our telephone conversation, Michael handled

   workshops and attended many outside meetings and seminars

   representing The Corben Institute. The biggest part of life

   insurance sales is getting in front of people who need life

   insurance or people who can recommend to others to buy life

   insurance from us, Michael was a large part of our success.

   Michael was paid $ 5,000 a month, which was based on our life

   insurance sales. We are in the Life Insurance business, all of

   our income comes from commissions. Everyone in the office was

   asked to do other jobs from time to time but everyone knew we

   live and die based on commissions from life insurance sales.

It is quite evident, therefore, that petitioner's work with Corben was not devoted to one insurance company, and, moreover, petitioner was required to perform other2006 Tax Ct. Summary LEXIS 27">*37 duties for Corben beyond selling insurance. Additionally, the statement establishes that petitioner was not considered an employee by Corben. Petitioner's earnings from Corben were reflected on Forms 1099, which indicate that petitioner was considered to be self-employed and not an employee. The Court holds, therefore, that petitioner was not an employee of Corben, nor was he a statutory employee. ³ Petitioner was engaged in a self-employment activity, and, as such, his net earnings from that activity were subject to self-employment tax. Respondent, therefore, is sustained in concluding that petitioner was not a statutory employee and was engaged in a self- employment activity, the net income of which is subject to self-employment tax as determined in the notice of deficiency.

2006 Tax Ct. Summary LEXIS 27">*38 The second issue relates to adjustments in the notice of deficiency as to the income and expenses reported by petitioners on their income tax return for 2000 relating to the activity with Corben reported on Schedule C. ⁴

On Schedule C, petitioners reported gross receipts of $ 61,100. In the notice of deficiency, respondent increased that amount by $ 1,000. Petitioner did not address this adjustment at trial; consequently, that adjustment is deemed conceded. As to the expenses, the amounts deducted on Schedule C and the amounts disallowed are as follows:

               Claimed on    Disallowed by

                Return      Respondent

Other expenses          $  7,599      $  7,599

Car and truck expenses       14,046       14,046

Meals and entertainment2006 Tax Ct. Summary LEXIS 27">*39       3,617       3,617

Repairs and maintenance       1,845       1,845

Travel               4,295       4,295

Legal and professional        876        876

As to the other expenses of $ 7,599 shown above, respondent at trial conceded that petitioner was entitled to a deduction of $ 610 for parking. Respondent also conceded that petitioner was entitled to a deduction for supplies. That concession is not clear because petitioner claimed a separate line item expense of $ 2,310 for supplies on Schedule C of the return, and that amount was not disallowed or adjusted in the notice of deficiency. Since a Rule 155 computation will be necessary in this case, the nature and amount of this concession can be taken into consideration by the parties in determining the deficiency.

With respect to the expenses listed above for car and truck, meals and entertainment, and travel, petitioner did not address those at trial. Instead, petitioner offered into evidence envelopes as to each of these expenses containing receipts that he contends would substantiate the amounts claimed on the return. 2006 Tax Ct. Summary LEXIS 27">*40 The envelopes referred to essentially contain only receipts; however, the substantiation requirements of section 274(d) appear to be applicable to all the amounts claimed. No books and records were offered to corroborate or otherwise satisfy the strict substantiation requirements of section 274(d). Petitioner, being a former auditor for the IRS, certainly knew what is required for substantiation of expenses of this nature. The Court, therefore, declines to consider the exhibits offered as proof that the expenses claimed are deductible. Respondent, therefore, is sustained as to those expenses.

The final issue is respondent's determination that petitioners are liable for the section 6662(a) accuracy-related penalty.

Section 6662(a) imposes an accuracy-related penalty in the amount of 20 percent on any portion of an underpayment of tax that is attributable to causes set forth in subsection (b). However, under section 6664(c), no penalty shall be imposed under section 6662(a) with respect to any portion of an underpayment if it is shown that there was a reasonable cause for the underpayment and that the taxpayer acted in good faith with respect to the underpayment.

The determination2006 Tax Ct. Summary LEXIS 27">*41 of whether a taxpayer acted with reasonable cause and in good faith is made on a case-by-case basis. Sec. 1.6664- 4(b), Income Tax Regs. The most important factor is the extent of the taxpayer's effort to assess the taxpayer's proper tax liability. See id. An honest misunderstanding of fact or law that is reasonable in light of the experience, knowledge, and education of the taxpayer may indicate reasonable cause and good faith. Remy v. Commissioner, T.C. Memo. 1997-72. Here, petitioner is an attorney with a specialized degree in tax law who was employed as an auditor by the IRS for several years. His education, knowledge, and experience in that field place him in a category that few taxpayers who come before this Court have. The Court has no choice but to sustain respondent on this issue.

Reviewed and adopted as the report of the Small Tax Case Division.

Decision will be entered under Rule 155.