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and, we assume, petitioner and those under his supervision had
performed all (or the bulk) of the services required of them for
petitioner to earn a commission. The advance commissions were,
thus, not paid for future services. They were paid with respect
to past services for which compensation was not yet due (i.e.,
had not yet been “earned”) under the agreement.
The advance commissions were described as “loans payable on
demand” in the agreement, and interest accrued on any balance of
advance commissions. Petitioner’s obligation to repay the
advance commissions was secured by, among other things,
compensation payable under the agreement (i.e., earned
commissions). If IMA’s sole recourse for repayment of the
advance commissions were earned commissions, we would have no
difficulty concluding that the advance commissions were
compensation for services, includable in gross income. In George
Blood Enters., Inc. v. Commissioner, T.C. Memo. 1976-102, we
stated:
Advances of commissions to a taxpayer under an
agreement that places no personal liability of
repayment on him but provides that any excess of the
advances over commissions earned are to be recovered by
the payor only by crediting earned commission against
the advances constitute income to the recipient when
the advances are received. L.L. Moorman [v.
Commissioner], 26 T.C. 666, 674 (1956); Kenneth
Drummond [v. Commissioner], 43 B.T.A. 529, 532--533
(1941). * * *
Recently, in Dennis v. Commissioner, T.C. Memo. 1997-275, we
determined that an insurance agent was personally liable for the
repayment of advance commissions notwithstanding that such
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