Comprehensive and Detailed Explanation:TheReasonable Basis Testallows an employer to classify a worker as anindependent contractorif:
A previous IRS audit approved similar treatment
A court ruling or IRS ruling supports classification
Industry practices support independent contractor status
Option A (Common Law Test)determines if a worker should be anemployee or independent contractor, butdoes not override misclassification.
Option C (Physical Presence Test)applies toforeign earned income exclusions.
Option D (Permanent Resident Test)applies toimmigration status, not worker classification.
[Reference:, IRS – Reasonable Basis Test (Section 530 Relief), Payroll.org – Independent Contractor vs. Employee Guidelines, , ]
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