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We have considered all of respondent's arguments, but we
have not found them convincing.
In the interest of promoting uniformity, consistency, and
fairness in the disposition of this issue with respect to former
insurance agents who receive termination payments under similar
contractual agreements, we follow the decision of the Court of
Appeals for the Ninth Circuit in Milligan v. Commissioner, supra.
Accordingly, upon further reflection and analysis, we hold that
the termination payments petitioner received in 1990 and 1991 are
not subject to self-employment tax. Because we conclude that the
termination payments were not "derived" from the carrying on of
petitioner's insurance business,4 we need not decide the precise
nature of the payments or specifically characterize them as a
particular type of income. In other words, we need not decide in
this case whether the termination payments are consideration for
an agreement not to compete or the purchase of petitioner's
agency, including its assets and goodwill. Milligan v.
Commissioner, 38 F.3d at 1100.
4 See, e.g., Ohio Farm Bureau Federation, Inc. v.
Commissioner, 106 T.C. 222, 236 (1996), an analogous case, in
which we pointed out that the statutory language defining
"unrelated business income" in sec. 512(a) is similar to that
contained in sec. 1402(a). There it was held that a lump-sum
payment made by Landmark, Inc., to the taxpayer, pursuant to the
terms of a nonsponsorship and noncompetition clause contained in
their termination agreement, did not constitute unrelated
business taxable income under sec. 511(a). We applied the
rationale of Newberry v. Commissioner, 76 T.C. at 444. The
Government did not appeal our decision, and the IRS has since
revoked GCM 39865, TR-45-1437-90 (Dec. 12, 1991), which reached a
contrary conclusion.
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