- 2 -
claim Schedule C office expenses of $3,600; (4) whether he is
subject to self-employment tax of $6,365; and (5) whether he is
liable for an accuracy-related penalty under section 66621 of
$1,052.2
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time he filed the
petition, petitioner resided in El Paso, Texas.
A. Insurance Business
From approximately 1988 through 1994, petitioner worked as
an insurance agent for American Income Life Insurance Co.
(American). As part of its business practice, American would pay
petitioner the year’s commissions in advance for each insurance
policy petitioner sold during the year. Petitioner also would
receive a renewal commission provided that the insured renewed
the policy. American would also lend petitioner funds to cover
expenses related to his business for American.
1 All section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
2 Respondent issued a notice of deficiency claiming, inter
alia, a negligence penalty of $2,627.20. However, because of
petitioner’s reliance on a letter from the attorney who
represented him during the insurance company settlement,
respondent concedes the penalty on the portion of the
underpayment related to this settlement.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011