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For their participation in the transaction, in the Wentz
case, 105 T.C. at 11-12, we stated: "[The taxpayers] were
compensated with the annual benefits of whole life insurance
policies, thus triggering a taxable event." Relying in part on
Woodbury, we found that the "undeniable accession to wealth,
clearly realized", Commissioner v. Glenshaw Glass Co., 348 U.S.
426, 431 (1955), that the Wentzes enjoyed equaled the amount of
first-year premium. Unlike petitioners, however, the taxpayers
in Wentz and Woodbury did not execute notes in connection with
the transactions under consideration in those cases.
In this case petitioners concede on brief that if income has
been realized as a result of the transactions here under
consideration, the proper measure of the income equals the first-
year premium paid in connection with each policy. Petitioners
argue, however, that the transactions did not result in the
realization of income because they "paid" for the insurance with
nonrecourse notes. According to petitioners, the notes, which
they contend represent bona fide indebtedness, distinguish their
case from Wentz v. Commissioner, supra, and Woodbury v. United
States, supra. Respondent argues that the notes do not represent
bona fide indebtedness and should therefore be ignored.
Respondent finds support for his argument in Haderlie v.
Commissioner, T.C. Memo. 1997-525. Like petitioners, the
Haderlies were clients of the Schwabs and were induced by them to
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