- 9 -
with the Companies, a criterion obviously tied to petitioner's
services with the Companies. Finally, the agreement which
provided for such payments stated that petitioner was to be
considered "an independent contractor for all purposes and in all
situations". We find the extended earnings payments were clearly
received in respect of a prior "'trade or business * * * actually
carried on'" by petitioner. Koszewa v. Commissioner, supra
(quoting Newberry v. Commissioner, supra at 444). Thus, the
extended earnings received by petitioner are subject to self-
employment tax on the grounds that they were from a trade or
business carried on by petitioner within the meaning of section
1402. See also Dunn v. Commissioner, T.C. Memo. 1994-414;
Erickson v. Commissioner, supra.
Petitioners rely on the Court of Appeals for the Ninth
Circuit's reversal of the Tax Court in Milligan v. Commissioner,
38 F.3d 1094 (9th Cir. 1994), revg. T.C. Memo. 1992-655. In
Milligan, the taxpayer was an independent contractor who sold
State Farm Insurance policies for over 30 years. The taxpayer's
contract with State Farm provided that, upon termination, an
agent who had 2 or more years of service with the company would
receive "termination payments" for 5 years following termination.
Id. at 1096. The amount of the payments for the first post-
termination year depended on the income generated by the agent
during 12 months prior to termination. Id. For the subsequent 4
years, the payments were based on a fraction of the amount
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