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While he denies that he received a $3,577 discount, he
acknowledges that he may have received a discount, but he does
not know the size of it. Petitioner did not put into evidence
the insurance policies, evidence as to his basis in such
policies, the cost, or the fair market value of such policies.
Commission Expense
Respondent determined that petitioners overstated the
commission expense shown on Schedule C of their 1989 Federal
income tax return by $403. Petitioner testified that he
presented respondent with substantiation of the $403 deduction.
No such substantiation was introduced into evidence at trial.
Advance Commissions
Petitioner was an insurance sales agent for American Service
Underwriters, Inc. (American), for the years 1988 through 1991.
Petitioner was paid advance insurance sales commissions in the
amounts of $93,413, $17,839.79, $51,161, and $42,529 for the
1988, 1989, 1990, and 1991 tax years, respectively. Under
petitioner's contract with American, he would receive a monthly
draw against his future commission income. Petitioner signed a
note, dated July 14, 1986, which made him personally liable on
the advance commissions, payable on demand. Regarding such
personal liability, the contract with American provided:
7. INDEBTEDNESS: Any and all indebtedness of any
kind or nature owed by [petitioner] to [American] shall
be and serve as a first lien on any commissions due or
to become due said [petitioner]. [American has] the
right and may at any time elect to withhold or offset
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