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Respondent called Carl Earl Diltz, Jr., to explain Farmers’s
policy regarding the tax treatment of retention amounts. Mr.
Diltz was employed by Farmers in its accounting department for 36
years and is now retired. Mr. Diltz began his career at Farmers
as an accounting clerk in 1959 and ended his career in 1995 as
director of accounting for the entire company. Mr. Diltz was
thoroughly familiar with Farmers’s DMAA contracts, including the
terms, dates that the terms were changed, and the reasons why the
terms were changed. Mr. Diltz’s testimony was highly credible.
Mr. Diltz testified that Farmers always reduced the amount
of income to the district managers reported on the Forms 1099 by
the retention amounts, and that Farmers did not treat the
retention amounts as taxable income to the managers under the
DMAAs:
Q. [D]uring your tenure from * * * 1959 to 1995 when
you retired, was it ever Farmers procedure to report
those retention amounts as income to district managers?
A. No.
Mr. Diltz also testified that Farmers’s procedures were
consistently followed on a nationwide basis, and that it was his
“primary responsibility as a director to develop those procedures
and to see that all 16 offices were doing exactly the same
thing”. We therefore have found that Farmers did not report the
retention amounts as income to Mr. Farnsworth.
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