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uniform, regularly scheduled payments in lieu of his renewal
commissions. Upon his retirement as an insurance agent, the
taxpayer elected to receive the uniform, regularly scheduled
payments rather than the renewal commissions to which he was
entitled. The District Court reasoned that the payments made to
the taxpayer in lieu of renewal commissions merely provided for a
uniform manner of payment of renewal commissions and did not
alter the nature of the payments. Because renewal commissions
are subject to self-employment tax, the District Court held that
the payments made in lieu of the renewal commissions are also
subject to self-employment tax.
Similarly, in the Erickson case, this Court held that
payments made under a Settlement Agreement that replaced the
taxpayer insurance agent's former agreement governing the payment
of renewal commissions were subject to self-employment tax. The
taxpayer in the Erickson case, who had recently separated from
service as an insurance agent, was entitled to receive renewal
commissions pursuant to a Leveling Agreement that provided for
monthly payments over a 180-month period. However, as a result
of disputes between the taxpayer and the insurance company, the
insurance company entered into a Settlement Agreement with the
taxpayer. The Settlement Agreement nullified the Leveling
Agreement and provided that the taxpayer was to receive uniform,
monthly payments over a 240-month period, and then smaller
uniform, monthly payments for the remainder of his life.
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