108 T.C. No. 22
UNITED STATES TAX COURT
RAMEAU A. AND PHYLLIS A. JOHNSON, ET AL.,1 Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 16038-93, 16039-93, Filed June 16, 1997.
17007-93, 14430-94.
Ds sold multiyear vehicle service contracts
(VSC's) in connection with the sale of motor vehicles
under a common program administered by A, an unrelated
party. Under the terms of the program, Ds retained a
portion of the contract price as their profit and
remitted the remainder to A: (1) For deposit of a
specified amount in escrow to fund their obligations
under the VSC, and (2) for payment of A's fees and a
premium for excess loss insurance provided by an
unrelated insurance company. Ds currently included in
gross income only the portion of the contract price
that they retained as profit. Ds reported amounts held
in escrow only when released to them.
1 Cases of the following petitioners are consolidated
herewith: Thomas R. and Karon S. Herring, docket No. 16039-93;
DFM Investment Co., docket No. 17007-93; and David F. and
Barbara J. Mungenast, docket No. 14430-94.
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