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capital assets from the sale of petitioner's insurance agency or
are self-employment income subject to the self-employment tax
under sections 14012 and 1402. We hold that the payments are
self-employment income subject to self-employment tax.
This matter was submitted to the Court fully stipulated
pursuant to Rule 122. The stipulation of facts and the exhibits
attached thereto are incorporated by this reference.
At the time the petition was filed, petitioners resided in
Fort Collins, Colorado. On March 13, 1973, petitioner executed a
Career Agent's Agreement (the Agreement) with American Family
Life Insurance Co., American Family Mutual Insurance Co., and
American Standard Insurance Co. of Wisconsin (collectively the
Companies). The Companies' principal office was at Madison,
Wisconsin.
According to the Agreement, an insurance agent of the
Companies could be eligible for "extended earnings" when the
Agreement was terminated. Aside from certain paperwork and
reporting requirements, the elements which must be satisfied
under the Agreement in order for an agent to qualify for extended
earnings are: (a) Within 10 days of termination, the agent must
return to the Company all policies and policy records, manuals,
materials, advertising and supplies or other property of the
2All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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