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D. Crop Hail Insurance Business
On March 11, 1977, petitioner was licensed as an insurance
agent. From 1977 to December 1990, petitioner sold crop hail
insurance under the names Jondahl Insurance and Jondahl Insurance
Agency (Jondahl Insurance). Jondahl Insurance entered into
several contracts with Farmer’s Mutual Crop Hail Insurance Co.
(Farmer’s Mutual) between 1983 and 1986 that authorized Jondahl
Insurance to act as an agent of Farmer’s Mutual in certain
counties. Jondahl Insurance also entered into an agency contract
with Old Republic Insurance Co. in 1989. A Farmer’s Mutual 1990
policy register reflects that Jondahl Insurance earned $12,881.70
in commissions from Farmer’s Mutual during that year. The
Farmer’s Mutual 1991 policy register reflects that Jondahl
Insurance earned $3,141.95 in commissions from Farmer’s Mutual
during that year. Petitioner did not report any commissions
earned from Farmer’s Mutual for the sale of crop hail insurance
on his individual 1990 and 1991 Federal income tax returns.
In 1990, Gary Ihry of Valley Crop Insurance purchased
Jondahl Insurance for $25,000.3 Mr. Ihry paid Jondahl Insurance
$14,962 in 1990 in partial satisfaction of the purchase price.
The parties stipulated that Farmer’s Mutual paid Jondahl
3It is not apparent in the record how Jondahl Insurance
earned commissions in 1991 from Farmer’s Mutual after selling its
crop hail insurance business to Mr. Ihry in 1990. The record
does not contain Forms 1099 evidencing that Farmer’s Mutual
actually paid petitioner these commissions.
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