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agreement to sell insurance on behalf of Farm Bureau would be
amended.
An Amendment to Contract Between James J. Lencke and United
Farm Bureau Family Life Insurance Company, United Farm Bureau
Mutual Insurance Company, and Their Subsidiaries (contract
amendment), executed in September 1989, provided that Mr. Lencke
would not earn any new commissions (other than first writings on
policies previously written), and would receive, in lieu of
renewal commissions, five monthly payments of $5,000. Petitioner
received two of the monthly payments in 1990 which totaled
$10,225.
Mr. Lencke also received $874 in residual premiums in 1990,
and $684 in residual premiums in 1991. In 1990, Mr. Lencke had
premium returns totaling $1,359.
Petitioners reported the amounts Mr. Lencke received as
residual premiums in 1990 and 1991 as other income on line 22 of
their joint Federal income tax returns for 1990 and 1991,
respectively. However, they did not report the $10,225 Mr.
Lencke received in lieu of renewal commissions in 1990 as income
on their tax return for that year. Petitioners have conceded
that the $10,225, less the premium returns for 1990, should have
been reported as income on their 1990 return. But they allege in
their petition that the residual premiums received by Mr. Lencke
in 1990 and 1991, and the amount received by him in lieu of
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