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Petitioner claims he canceled the debt because he thought the
$9,000 commission was “inappropriate”. Because petitioner was an
agent of WFIC, his unilateral decision to effectively reduce
WFIC’s commission by $7,000 without an adequate explanation shows
that the $7,000 was in substance compensation from WFIC to
petitioner, who then gave it as a gift to his sister.
Consequently, the $7,000 is compensation includable in
petitioner’s 1993 income.
In October 1993, petitioner paid for the Buick with WFIC’s
funds. Respondent includes the price of the car in petitioner’s
income in the notice of deficiency. Petitioner claims that the
car was purchased for WFIC’s business use and that a mileage log
was kept for business purposes. He also claims that Mary
reported compensation income on her 1993 and 1994 personal tax
returns and received Forms W-2 in 1993 and 1994 for her use of
the Buick.
Petitioner did not produce either Mary’s 1993 tax returns or
Forms W-2 or her 1994 Forms W-2 or tax returns. The purported
mileage log of automobile use for 1993 is in the record. First,
we do not find the mileage log to be a credible representation of
petitioner’s and Mary’s use of the Buick. The mileage log
includes entries for the months of July, November, and December
1993, but the Buick was not purchased until October 15, 1993,
according to the purchase contract. In addition, the mileage log
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