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sell the Companies' insurance. Petitioner was obligated to
return all of these items to the Companies when the Agreement was
terminated. Petitioner was permitted to use the Companies' names
and symbols, until the Agreement was terminated. Additionally,
the Agreement provided that petitioner was not an employee of the
Companies but an independent contractor. Petitioner had control
of his activities as to the time, place, and manner of soliciting
clients.
As of March 31, 1988, petitioner terminated the Agreement
with the Companies and elected to receive his extended earnings
in 36 monthly installments. Petitioner was entitled to receive
$93,345.89 of extended earnings benefits payable in 35 monthly
installments of $2,592.95 with the last check in the amount of
$2,592.64. Petitioner received the extended earnings payments
from the Companies as follows:
1988 $20,743.60
1989 31,115.40
1990 31,115.40
1991 10,371.49
Total 93,345.89
Petitioners timely filed joint Federal income tax returns
for 1989, 1990, and 1991. Petitioners reported the extended
earnings received in 1989, 1990, and 1991 on Schedule D, Capital
Gains and Losses, as proceeds from the sale of an insurance
agency.
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