Verl W. and Frances M. Haderlie - Page 2

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          petitioner Verl W. Haderlie applied for an insurance policy, paid           
          the $40,653 premium, and $40,653 was returned to him by the                 
          procuring insurance agent.  The insurance agent promoted the                
          transaction because he received about 118 percent of $40,653 from           
          the insurance company as an inducement to sell its policies.                
          Respondent determined that the above-described circumstances                
          resulted in income to petitioners measured by the cost of the               
          insurance coverage or the $40,653 premium.                                  
               We first addressed this type of scheme or transaction in               
          Wentz v. Commissioner, 105 T.C. 1 (1995), and held that the                 
          taxpayer/insured realized income in the amount of the insurance             
          premium kickbacks from the insurance agent.  Petitioners here               
          argue that the circumstances of their case vary from Wentz v.               
          Commissioner, supra, in a manner that would change the outcome.             
                                  FINDINGS OF FACT                                    
               Petitioners had their legal residence in Idaho Falls, Idaho,           
          at the time their petition was filed.  Verl W. Haderlie                     
          (petitioner) is a high school graduate and has been involved in             
          the business of hauling milk by truck.  During 1991, petitioner             
          was involved in the technical aspects of the process of producing           
          milk, including the identification and cure of bacterial                    
          problems.  From this activity and a small farming operation,                
          petitioner earned somewhat less than $50,000 for the 1991 taxable           

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