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Congress to tax all gains except those specifically exempted.”
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955).
Moreover, section 1.61-2(a)(1), Income Tax Regs., provides that
“Wages, salaries, commissions paid salesmen, * * *, commissions
on insurance premiums, * * * are income to the recipients unless
excluded by law.”
In the context of insurance agents who receive advances
based on future commission income, whether those advances
constitute income depends on whether, at the time of the making
of the payment, the agent had unfettered use of the funds and
whether there was a bona fide obligation on the part of the agent
to make repayment. Dennis v. Commissioner, T.C. Memo. 1997-275.
In many instances, repayment is simply made out of future earned
commissions. Where the repayments will be taken only from future
commissions earned, and the agent will not become personally
liable in the event that the future income does not cover the
repayment schedule, the payments will constitute income to the
agent for each year to the extent he received them. Moorman v.
Commissioner, 26 T.C. 666, 673-674 (1956). These payments are
nothing more than disguised salary. Beaver v. Commissioner, 55
T.C. 85, 91-92 (1970). However, in the situation where the
advances are actually loans, when the repayments are offset
directly by the future earned commissions, then the agent will
have either commission income or cancellation of indebtedness
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