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the agreement limit petitioner’s right to commissions on renewal
premiums. If petitioner’s right to commissions on renewal
premiums were not vested, and earned commissions were not
sufficient to liquidate his debit balance (of advance
commissions), nothing in the agreement prevents IMA from
demanding payment of that balance.
Respondent also relies on the stipulated testimony of Max
Heinz, director of operations of IMA. Mr. Heinz' stipulated
testimony is as follows:
That his name is Max Heinz and that he is employed
by International Marketing Agencies, Inc. His position
with the company is Director of Operations. He is
familiar with the issue presented in this case as to
whether "advances" made to the agents of IMA were non
taxable loans or were taxable compensation and income.
He states that the company takes the position that the
advances are to be treated as taxable compensation
income at the time the advances are made, and the
company files formed [sic] 1099 consistent with that
position.
He also states that the company has in the past
advised agents when they leave employment with the
company that the company expects that the advances be
repaid to the company out of future insurance renewal's
[sic] and that if those renewal's [sic] are
insufficient to make such payment then the advances
will be deemed a liability of the employee. The
company typically sends out a letter reminding the
employee of the obligation, but generally does not
proceed further with the legal process to collect the
debt.
We are unpersuaded by that testimony. First, it fails to explain
the striking inconsistency between the terms of the agreement
(advance commissions are “loans payable on demand”) and IMA’s
practice of treating advance commissions as reportable income.
Second, we are unable to make much of Mr. Heinz' contradictory
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