- 7 -
1990 and 1991, respectively. Allstate made contributions of
$9,020 and $8,393 on behalf of Mrs. Lozon into Allstate's pension
plan for the years 1990 and 1991, respectively. Mr. Lozon had no
vested interest in the pension plan during 1990 or 1991. Mrs.
Lozon's vested interest in the plan was zero in 1989, $13,193 in
1990, and $16,843 in 1991.
The payments made by Allstate on behalf of petitioners to
the plans for the years 1989, 1990, and 1991 were excluded from
petitioners' gross income (the payments were not reported on the
Forms W-2 given to petitioners, and petitioners did not report
the payments as income on their tax returns).
Compensation paid to petitioners from Allstate in the
amounts of $164,998, $230,152, $255,993 was reported by Allstate
on Forms W-2 as wages paid to petitioners for 1989, 1990, and
1991, respectively. Allstate withheld income and Social Security
taxes from petitioners' wages. Petitioners reported these
amounts as wages on their 1989, 1990, and 1991 joint Federal
income tax returns (tax returns).
Petitioners claimed business expenses in the amounts of
$72,204, $99,669, and $114,669 on Schedule C of their tax returns
for 1989, 1990, and 1991, respectively.
Petitioners paid no self-employment tax for 1989, 1990, and
1991.
On August 1, 1992, petitioners signed a Neighborhood
Exclusive Agency Agreement (NEA agreement) with Allstate which
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