Tunji and Christina Mabinuori - Page 4

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               Petitioner sold insurance successfully for many years.  From           
          December 1997 to December 1999, petitioner worked for Farmers.              
          During his employment, Farmers advanced funds to petitioner to              
          help him establish a business office.  When his employment ended,           
          Farmers concluded petitioner was required to repay the advanced             
          funds.  Farmers recorded an account receivable from petitioner on           
          its books and sent him letters demanding repayment of the                   
          advances.  Farmers calculated that, as of January 2002,                     
          petitioner owed the company $16,644.74.                                     
               For the taxable year 2002, Farmers issued petitioner a Form            
          1099-MISC, Miscellaneous Income, reporting $666.69 of nonemployee           
          compensation.  Petitioners did not receive payment, however,                
          because Farmers applied the $666.69 towards the aforementioned              
          account receivable.  Petitioners did not report the $666.69 on              
          their tax return.  Respondent initially determined that the                 
          entire amount was includable in petitioners’ gross income, but              
          now concedes all but $15 of this adjustment.  The parties                   
          stipulated that the $15 represents commission income.                       
          2.   Petitioner’s Involvement With MetLife                                  
               In or about July 2002, petitioner entered into a Special               
          Agent Auxiliary Agreement (the agreement) with MetLife.  The                
          agreement provided that petitioner would work as an independent             
          contractor for MetLife for a 10-to-14 week training period.                 
          After that time, MetLife would either terminate the relationship            
          or offer petitioner permanent employment.  Petitioner completed             




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