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commissions in 1999, $17,705 in 2000, and $14,673 in 2001.6
American Life issued Forms 1099-MISC, Miscellaneous Income, for
these amounts in the respective years.
Petitioners filed timely joint Federal income tax returns
for 1999, 2000, and 2001. However, because petitioners were
confused by the Forms 1099 sent to them by American Life, they
did not report the income reflected on those forms for any of the
years at issue.7
On October 10, 2003, respondent issued the notice of
deficiency (notice) for the years in question. As stated above,
respondent determined deficiencies of $5,939, $5,472, and $4,318
in petitioners’ Federal income taxes for 1999, 2000, and 2001,
respectively. In the notice, respondent explained:
According to American Income Life Insurance Company,
the income on 1099 you received is income to you.
These are your earning[s] from commission on prior
sales. According to American, you took advance monies
on your future earnings and the 1099 amounts are what
was applied to the amount due. * * * These earnings
are to be reported as income either in the year you
received the monies or the year earned.
6The amounts in the ledgers for 2001, attached as part of
the Stipulation of Facts, do not equal the amount on the Form
1099-MISC, Miscellaneous Income, from American Life for that
year. There is a $32 difference in petitioner’s favor on the
Form 1099. For purposes of this opinion, the Court considers the
amounts determined in the notice of deficiency to be correct, as
no evidence was presented to establish the $32 difference.
7Although petitioners claim they contacted American Life
questioning the Forms 1099, no evidence was presented to show
that the amounts on the Forms 1099 were incorrect.
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