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end profits”. He described the “back-end profits” as relating to
purchases by car owners of extended warranties, credit life
insurance, and “gap” insurance (the nature of which was not
described). Petitioner also advertised in newspapers for his
services in obtaining approvals for car loans.
The principal issue in this case is with regard to $13,500
in commissions paid to petitioner by the car dealer, Victory
Motors, during 2001. Petitioner’s engagement with that
dealership was for about 2 months that year. In that time
period, petitioner received $13,500 in commission payments from
Victory Motors. For some time, petitioner had encountered
difficulties in having his earned commissions paid to him, and,
after approximately 2 months in 2001, petitioner terminated his
relationship with Victory Motors and went to work for another
automobile dealer. At the time he left, petitioner had received
a total of $13,500 in commissions from Victory Motors. No
further commissions were paid by Victory Motors to petitioner.
On their joint Federal income tax return for 2001,
petitioners did not include or report as income the $13,500 in
commissions petitioner received that year. In the notice of
deficiency, respondent determined that the commissions
constituted gross income. Respondent also determined that these
commissions represented self-employment income, and the
deficiency included $362 as self-employment taxes under section
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Last modified: May 25, 2011