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income and Schedule A employee business expenses as Schedule C
items.
Issue 1. Retirement Plan Contributions
The first issue for decision is whether petitioners are
entitled to a deduction for contributions allegedly made by or on
behalf of petitioner to a retirement plan.
Cal-American
Petitioner was involved in the formation of Cal-American
Insurance Company (Cal-American), a property and casualty insurance
company, and was its president from September 1984 to March 1989.
Prior to Cal-American’s formation, petitioner was the deputy
insurance commissioner for the State of California. Cal-American
was acquired in 1987 by Westech Insurance Network, Inc. (Westech),
which also owned Bancsure Insurance Services, Inc. (Bancsure).
Although president of Cal-American, in actuality petitioner
was an employee of Westech. And, from the time Cal-American was
acquired by Westech until March 1989, petitioner’s salary as well
as reimbursement for his expenses were paid by Bancsure, which
issued a Form 1099-Misc. and Form W-2 to petitioner for 1989. The
Form 1099-Misc. reflected nonemployee compensation in the amount of
$32,422.56. The Form W-2 reflected wages paid to petitioner in the
amount of $62,500. The $62,500 was composed of salary payments for
January and February, plus a severance payment.
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