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income at the time of the offsets. Cox v. Commissioner, T.C.
Memo. 1996-241; cf. Warden v. Commissioner, T.C. Memo. 1988-165.
In this case, Mrs. Harper continued to earn commissions on
policies that she had sold during her affiliation with Primerica
through August of 2003. However, instead of paying these
commissions to Mrs. Harper “by check”, Primerica diverted the
commissions to accounts showing balances owed by Mrs. Harper for
the advances and expenses payments previously described. We
believe that based on all of the evidence presented, that when
Primerica previously made advances to Mrs. Harper, she was not
taxed on those advances because the advances were loans secured
and payable through future earned commissions. Beaver v.
Commissioner, supra; Diers v. Commissioner, T.C. Memo. 2003-229.
Although the record before us is devoid of any contract that
may have existed between Mrs. Harper and Primerica, we are
convinced from our review of the detailed monthly statements of
accounting maintained by Primerica, and illustrated at Exhibit 5-
J, that under the system that Primerica used to account for its
agents’ commissions, advances Primerica paid to Mrs. Harper were
actually loans to be offset directly by future earned income.
As evidence for this conclusion, we point to the fact that
Mrs. Harper carried over a negative balance in her commission
account from 2002 and had a negative balance in her chargeback
recovery account for each month of 2003. For each month of 2003,
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