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v. Commissioner, 648 F.2d 1198, 1200 (9th Cir. 1981) (affirming
self-employment tax on sale proceeds from wheat that the taxpayer
grew in the past: “[S]elf-employment income is determined by the
source of the income, not the taxpayer’s status at the time the
income is realized.” (emphasis added)), affg. in part and revg.
in part T.C. Memo. 1979-71; sec. 1.1402(a)-1(c), Income Tax Regs.
Thus, the only relevant question is whether the item of
gross income in question is derived from the taxpayer’s trade or
business or from some other source. It seems safe to conclude
that petitioner was in the business of selling insurance as an
independent agent of State Farm Insurance Co. (State Farm). His
relationship with State Farm, including the terms under which he
would earn gross income from State Farm, were governed by his
written agency agreements with State Farm. The termination
payments were made pursuant to the State Farm Agent’s Agreement,
Form AA3 (the Agreement). The Agreement appoints petitioner an
agent of State Farm for an indefinite period. The Agreement
contains a preamble and six numbered sections:
(1) Mutual Conditions and Duties
(2) Compensation
(3) Termination of Agreement
(4) Termination Payments
(5) Extended Termination Payments
(6) General Provisions
The section entitled "Termination of Agreement" provides, in
pertinent part, that the Agreement terminates upon the agent’s
death or upon written notice by either party. That section also
contains a prohibition against competition by the terminated
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