Robert Schelble and Susan Schelble - Page 5

                                           - 5 -                                             
                On March 17, 1995, respondent sent, via certified mail, a                    
          statutory notice of deficiency to petitioners setting forth                        
          deficiencies in petitioners' Federal income tax for the taxable                    
          years 1989, 1990, and 1991.  Respondent contends that                              
          petitioner's extended earnings are subject to the self-employment                  
          tax under sections 1401 and 1402, because the extended earnings                    
          paid to petitioner were derived from petitioner's prior insurance                  
          business.  Petitioners contend that the extended earnings are the                  
          proceeds from the sale of petitioner's insurance agency to the                     
          Companies and are, therefore, proceeds from the disposition of a                   
          capital asset.  In the alternative, petitioners argue that the                     
          extended earnings are not sufficiently related to petitioner's                     
          past insurance business in order to make the payments subject to                   
          self-employment tax under sections 1401 and 1402.                                  
                Respondent contends that the "extended earnings" paid to                     
          petitioner by the Companies constitute self-employment income for                  
          purposes of the self-employment tax under sections 1401 and 1402,                  
          because the payments were derived from a trade or business                         
          carried on by petitioner.  Petitioners have the burden of proving                  
          respondent's determination is incorrect.  Rule 142(a); Welch v.                    
          Helvering, 290 U.S. 111 (1933).  Petitioner argues that his                        
          relinquishment to the Companies of the records and lists he                        
          maintained with respect to the policies he sold and the policy-                    
          holders to whom he provided service was tantamount to the sale of                  
          business "goodwill" to the Companies.  Thus, petitioners argue                     




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011