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advance payment amount” as “the portion of an advance payment
received by a taxpayer under a multi-year service warranty
contract that is paid by that taxpayer to an unrelated third
party * * * for insurance costs associated with a policy insuring
that taxpayer’s obligations under the contract”. Moreover, the
EWA’s between petitioners and their customers warrant that the
“Issuing Dealer has insurance with Western General Insurance Co.,
* * *-–a Licensed Insurer.” The Western General Agreement
entered into by each petitioner and Western General states that
Western General agrees to “issue and maintain individual
insurance policy coverage at DEALER’S [i.e., each petitioner’s]
expense which shall insure the DEALER for covered costs of
repairs and/or replacements incurred by the DEALER and covered
under the * * * [EWA]” and that each petitioner agrees to remit
to Western General “the insurance premium as provided in its rate
chart/manual”.
In addition to the foregoing admissions, stipulations, and
agreement terms, the evidence of the substance of petitioners’
arrangements with Western General supports the conclusion that
petitioners’ liability to Western General arose from the
provision of insurance. The regulations which define “economic
performance” in the case of a liability for insurance provided to
the taxpayer further provide that “insurance” for this purpose
“has the same meaning as is used when determining the
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