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payable in the first post-termination year, less commission
charge-backs. None of the termination payments depended on the
length of the taxpayer's service for State Farm and his overall
earnings. Id. In Milligan, we rejected the taxpayer's
contention that the termination payments represented payment for
the sale of the taxpayer's insurance business and held that the
"termination payments" were subject to self-employment tax.
Milligan v. Commissioner T.C. Memo. 1992-655. We found that
there was a sufficient nexus between the income received and the
taxpayer's trade or business to render the payments self-
employment income. Id.
The Court of Appeals acknowledged that in order for
Mr. Milligan to receive termination payments, he had to have
worked for State Farm as an independent contractor for 2 years or
more. Milligan v. Commissioner, 38 F.3d at 1098. The court
stated, however, that this fact by itself did not create a close
enough nexus to establish that the termination payments were
derived from Mr. Milligan's prior business activity within the
meaning of the self-employment tax. Id. The Court of Appeals
concluded that Mr. Milligan already had been fully compensated
for his services and that his business activity was not the
"source" of the termination payments. Id. at 1099.
We conclude that this case is distinguishable on its facts
from Milligan due to substantial differences that exist between
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