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two sales agent numbers and created a monthly account analysis
under each of petitioner’s agent numbers showing the account
activity. Each monthly account analysis reflects entries for the
policies petitioner sold as an agent for Bankers United. Bankers
United paid commissions via monthly checks based on the policies
petitioner sold.
On May 13, 1999, petitioner entered into an “Assignment of
Commissions” contract, whereby he assigned to Salt Creek Services
all interest in his commissions due from Bankers United.
Petitioner signed the “Assignment of Commissions” as both
assignor and assignee. Pursuant to petitioner’s request, Bankers
United paid his commission checks to Salt Creek Services.
Petitioner claimed Salt Creek Services was an irrevocable family
trust, an ongoing business, and his employer.
Bankers United marked the checks as commission payments on
the monthly account analysis. Bankers United printed out the
commission checks and manually compared them to the monthly
account analysis to verify accuracy. The checks and monthly
account analysis statements were then mailed out together to Salt
Creek Services.3
Bankers United filed a Form 1099-MISC, Miscellaneous Income,
reporting petitioner earned commissions totaling $113,469 in 2001
3 However, some of the commissions from Bankers United, for
the years at issue, on policies sold by petitioner were made
payable to the State of California Franchise Tax Board.
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Last modified: May 25, 2011