5
years, and that he paid tax only on the amounts reflected in the
third column. Nevertheless, he contends that only $128.44 of the
amount reported on the Form 1099 for 1990 is taxable income in
1990 because he received the remainder thereof in prior years;
namely, 1988 and 1989.
Section 61(a)(1) specifically provides that gross income
includes income from whatever source, including commissions from
the sale of life insurance. Commissioner v. Glenshaw Glass Co.,
348 U.S. 426, 431 (1955). In general, proceeds of a loan do not
constitute income because the benefit is offset by an obligation
to repay. United States v. Rochelle, 384 F.2d 748, 751 (5th Cir.
1967); Milenbach v. Commissioner, 106 T.C. 184 (1996).
Although petitioner's employment with MILICO terminated in
1989, he continued to earn commissions on policies sold by him
prior to his departure. Instead of paying these commissions to
petitioner, MapleLeaf credited his outstanding advances account
in accordance with its agreement with MILICO. When the advances
were made to petitioner, he was not taxable on them because they
were in effect loans. See Beaver v. Commissioner, 55 T.C. 85, 91
(1970). However, when the commissions earned by him in 1988 and
1989 were credited to his account, petitioner's obligation to
repay the loans was reduced by that amount, and the reduction of
that obligation did constitute the receipt of taxable income.
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