- 7 -
AFLIC for the balance of the debt, $93,595, payable in
installments beginning January 15, 1990. The third loan
agreement further provided that Mrs. Cooper would be released
from liability, but that the Lamar policies would remain assigned
to AFLIC. On or about July 21, 1989, AFLIC assigned all its
interest in the third loan agreement to AFIC.
Cooper was sent to prison sometime in 1989. As of December
1989, the Lamar policies had a total cash value of $853. On its
1989 Federal income tax return petitioner claimed a bad debt
deduction in the amount of $118,356 relating to the debts of
AFIC.5
OPINION
Issue 1. Section 482 Issue
Petitioner sold credit insurance policies written by AFLIC,
its wholly owned subsidiary, to its customers. Petitioner
remitted all the premiums to AFLIC and, in turn, received no
commissions or payments for selling the insurance. Respondent,
pursuant to section 482, reallocated 45 percent of the premiums
as commission income to petitioner.
Section 482 provides, in pertinent part, as follows:
5 Of the disallowed $118,356, $104,641 stems from the
Cooper debt. Respondent disallowed the balance, $13,715, because
petitioner failed to establish that a debt existed or became
worthless during 1989. Petitioner fails to address the $13,715.
We therefore assume that petitioner concedes that amount, and we
so find. Rule 151(e)(4) and (5); Petzoldt v. Commissioner, 92
T.C. 661, 683 (1989); Money v. Commissioner, 89 T.C. 46, 48
(1987).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011