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to make repayment. Dennis v. Commissioner, T.C. Memo. 1997-275.
In many instances, repayment is simply made out of future earned
commissions. Where the repayments will be taken only from future
commissions earned, and the agent will not become personally
liable in the event that the future income does not cover the
repayment schedule, the payments will constitute income to the
agent for each year to the extent he received them. Moorman v.
Commissioner, 26 T.C. 666, 673-674 (1956). These payments are
nothing more than disguised salary. Beaver v. Commissioner, 55
T.C. 85, 90 (1970). However, in the situation where the advances
are actually loans, when the repayments are offset directly by
the future earned commissions, then the agent will have either
commission income or cancellation of indebtedness income at the
time of the offsets. Cox v. Commissioner, T.C. Memo. 1996-241;
cf. Warden v. Commissioner, T.C. Memo. 1988-165.
Although petitioner’s employment with American terminated in
1994, he continued to earn renewal commissions on policies he had
sold before his departure. As provided in the settlement
agreement, instead of paying these commissions to petitioner,
American credited his account showing outstanding advances in
accordance with his settlement agreement with American. When
American made the advances to petitioner, he was not taxable on
them because they were in effect loans. See Beaver v.
Commissioner, supra at 91. When the commissions he earned after
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