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Beaver v. Commissioner, supra, advance commissions were not loans
because personal liability did not attach until after the years
in question, while at the time the advances were made there was
no personal liability, and the payor treated the advances as
salary advances.
Additionally, there was an administration fee of 1.3 percent
per month charged against the advance commissions balance.
Although it was not referred to as interest, petitioner testified
that the parties referred to and treated the fee as interest. In
light of the facts and circumstances in the record, this
testimony is logical and is accepted as fact. Given these facts,
we find that the advance commissions were loans and need not be
included in income where the income was earned as commissions on
sales or renewals perhaps in a later year. Respondent did not
determine the amount of income earned when petitioner sold
insurance.
Self-Employment Tax
Having decided that petitioner's receipt of the advance
commissions constituted loan proceeds and not income, it follows
that they are not liable for self-employment tax in the years in
question on those amounts received. However, a deduction of $403
on Schedule C has been disallowed due to a lack of
substantiation. Petitioners' nonemployee income is therefore
increased by $403, necessitating an increase in the self-
employment tax on that amount. Sec. 1401. Respondent concedes
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