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1.451-1(a), Income Tax Regs. The direct premium payments,
however, were made directly to the underwriters, and Kaiser had
no present or future claim to the funds. Thus, there was no set
of events that would ever establish Kaiser's right to receive the
payments. As a result, the amounts were not includable in
Kaiser's gross receipts.
We do not reach the issue of whether the indirect premium
payments were includable in Kaiser's gross receipts, because
petitioners have not established the respective amounts of direct
and indirect premium payments. As a result, even if Kaiser were
permitted to include indirect premium payments in its gross
receipts, petitioners have not established the amount, if any, of
such payments. We note, however, that approximately 90 percent
of the premiums were directly billed by the insurance
underwriters.
The parties have brought to our attention Rev. Rul. 69-192,
1969-1 C.B. 206. That ruling allowed an insurance agent similar
to Kaiser to include in its gross receipts the indirect premium
payments on policies it issued. In the present case, petitioners
have not established the amount, if any, of indirect premium
payments. Consequently, the revenue ruling does not support
petitioners' contentions.
Accordingly, we conclude that Kaiser's S corporation
election terminated by reason of excess passive investment
income, and we sustain respondent's determination.
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