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that the "extended earnings" qualify for capital asset treatment
under section 1221, since they arose from the sale of assets used
in a business. Petitioners cite Killian v. Commissioner, 314
F.2d 852 (5th Cir. 1963), affg T.C. Memo. 1961-83, and Kenney v.
Commissioner, 37 T.C. 1161 (1962), to support their theory that
the "extended earnings" payments constitute proceeds from the
sale of "goodwill". These cases are of no particular assistance
to petitioners. Neither case involved "extended earnings" or
similar payments made under an agency contract in lieu of future
renewal commissions upon termination of the agency contract; both
cases clearly involved an express sale.
Where we have upheld a taxpayer's claim that there was
a sale of assets, the agreement at issue expressly
referred to the transaction as a sale, and an abundance
of evidence demonstrated the existence of vendible
tangible assets, as well as vendible goodwill in the
form of insurance expirations. * * *
Erickson v. Commissioner, T.C. Memo. 1992-585, affd. without
published opinion 1 F.3d 1231 (1st Cir. 1993). Here, the
evidence does not support a finding of a sale of assets of a
business. The record clearly shows that there was no express
sales agreement, nor was there any evidence of vendible business
assets. Thus, we conclude that petitioners have failed to
satisfy their burden of proof that the "extended earnings"
constitute gain from the sale or exchange of capital assets.
Having resolved the capital asset issue, we must now address
whether the extended earnings payments that petitioner received
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