- 33 -
v. Commissioner, 38 F.3d at 1096-97; Gump v. United States, 86
F.3d at 1127-28. Thus, the Milligan and Gump cases are not
factually similar to the situation confronting us here.
Moreover, the Court of Appeals for the Ninth Circuit specifically
noted that renewal commissions are subject to self-employment
tax. Milligan v. Commissioner, 38 F.3d at 1098 (citing Erickson
with approval). The Court of Appeals for the Federal Circuit
also recognized the distinction between renewal commissions and
"extended earnings". Gump v. United States, 86 F.3d at 1130.
Likewise, our recent opinion in Jackson v. Commissioner, 108 T.C.
130 (1997), following the decision of the Court of Appeals in
Milligan, which dealt only with "termination payments", is
distinguishable from the renewal commissions involved in this
case.
Accordingly, we hold that the payments received by Mr.
Lencke in lieu of renewal commissions are subject to self-
employment tax because they retained the character of the renewal
commissions they replaced.
IV. Accuracy-Related Penalties
Section 6662(a) imposes a penalty equal to 20 percent of the
portion of the underpayment due to any substantial understatement
of income tax. Section 6662(d) defines both "understatement" and
"substantial understatement". Pursuant to section 6662(d)(2),
when the amount of tax required to be shown on a return exceeds
the amount actually shown (less any rebates provided in section
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