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our findings are based on the pleadings and documents submitted
at trial.
Jacob B. Neiman, petitioner's husband, was an insurance
agent for many years. During 1990, he did business with the Irv
and Bob Kemp Agency (Kemp). During 1990, Jacob B. Neiman was
paid $14,5425 in first year commissions. He was also paid $2,665
in renewal commissions in 1990. Kemp sent Mr. Neiman Forms 1099
with respect to these two payments. Kemp also advanced Mr.
Neiman $4,080 in 1990. Mr. Neiman agreed to repay the advance by
offsetting the payment against future commissions. The advance
was repaid sometime in 1992. No Form 1099 was issued to Mr.
Neiman with respect to the $4,080 advance made in 1990, nor was
the amount included as income on the 1990 return.
On Schedule C of the jointly filed Federal income tax return
for 1990, petitioner and her husband reported the $14,542 payment
and the $2,665 payment. Petitioner then subtracted the $4,080
advance from the commission income reported on the return.
In the notice of deficiency, respondent determined that
commission income was understated by $4,080. Petitioner
acknowledges that the $4,080 was erroneously deducted from
commission income received, and, therefore, the income on the
1990 return was understated by $4,080. Petitioner argues that
she should be excused from liability for tax on the
5 Rounded to nearest whole dollar.
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Last modified: May 25, 2011