James P. Whitmer - Page 3

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                                  FINDINGS OF FACT1                                   
              Petitioner resided in Chicago, Illinois, when he petitioned            
          the Court.  His business is insurance sales, and he has been in             
          this business since 1969.  Petitioner and his wife, Lucia A.                
          Whitmer, filed a 1987 Form 1040, U.S. Individual Income Tax                 
          Return, using the status of “Married filing joint return”.                  
          Although respondent’s notice of deficiency for the 1987 taxable             
          year was issued to both petitioner and Lucia A. Whitmer,                    
          Mrs. Whitmer did not petition the Court with respect thereto,               
          and, accordingly, she is not a party here.                                  
               Petitioner formed a wholly owned corporation, Whitmer                  
          Agency, Inc. (Whitco), on or about September 16, 1974, to issue             
          life and health insurance policies and annuities.  Petitioner was           
          Whitco’s president, and, in that capacity, he entered into a                
          “General Agent’s Contract” (Agent’s Contract) with ITT Life                 
          Insurance Corp. (ITT) on October 22, 1981.  Petitioner personally           
          guaranteed Whitco’s performance under the Agent’s Contract.                 
          Petitioner, in his capacity as Whitco’s president, also entered             
          into an “Advance Commission and Loan Agreement for General Agent”           
          (Agreement) with ITT on November 19, 1981.  Petitioner personally           
          guaranteed Whitco’s performance under the Agreement.  The Agent’s           
          Contract and the Agreement authorized Whitco to solicit and                 


               1 Some of the facts have been stipulated and are found                 
          accordingly.  The stipulation of facts and the attached exhibits            
          are incorporated herein.                                                    




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