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virtue of having made joint returns with her husband. Hereafter,
we shall use the term “petitioner”, in the singular, to refer
only to petitioner James J. Gales.
Petitioner’s Engagement by International Marketing Agencies, Inc.
During 1992 and 1993, petitioner was engaged as a national
marketing director by International Marketing Agencies, Inc.
(IMA), an insurance broker that sold health insurance to small
businesses. Petitioner was responsible for IMA sales for the
territory west of the Mississippi River. He would recruit agents
to sell insurance in various territories he established. As well
as selling insurance directly and receiving commissions from
those sales, petitioner received an “override commission” on
insurance sold by agents he recruited.
Petitioner’s Agreement With IMA
Petitioner’s engagement by IMA was governed by an agreement
entered into between petitioner and IMA on February 15, 1989. As
subsequently modified, that agreement (the agreement) was in
effect in 1992 and 1993. The agreement provides that petitioner,
as an independent contractor, is engaged for the purpose of
soliciting and obtaining applications for insurance offered by
insurance companies represented by IMA. Among the terms and
conditions of the agreement are the following:
COMMISSIONS WHILE UNDER CONTRACT
1) You [petitioner] will earn commissions, in
the amount shown on the last page of this
contract, on policies or certificates written
by you as premiums are earned by the CO [the
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Last modified: May 25, 2011