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the options rather than as ordinary income, or the paid
commissions should be treated as deductible business expenses
that more than offset his commission income. Petitioners argue
that this integrated approach to taxing the commission
transactions would more accurately reflect their substance and
has parallels in other areas of the Code.
We have no occasion to consider whether either of
petitioners' proposals for integrating the tax treatment of the
commissions at issue to achieve consistency would be desirable as
a matter of tax policy; the proper tax treatment of such
commissions is well established. The parties have stipulated
that Mr. Kelly received the commissions as compensation for
providing business for his employer. There is no evidence that
they were intended specifically as a discount or rebate. The
definition of gross income expressly covers "compensation for
services, including * * * commissions". Sec. 61(a)(1). The fact
that the taxpayer earned the commissions on transactions in which
he acquired property from or through his employer for his own
account does not alter their character as ordinary income. The
argument that in such cases the commissions should be treated as
discounts from the cost of the property, and accounted for by
adjustments to basis or the sale price rather than included in
gross income, has been repeatedly rejected by this Court and
others. Ostheimer v. United States, 264 F.2d 789 (3d Cir. 1959)
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