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proceeds of settlement of her claim in the State Farm class
action lawsuit must be included in her 1992 gross income. We are
therefore faced with petitioner’s alternative arguments that she
is entitled to a substantial deduction in arriving at her 1992
taxable income for her contributions to the TJM pension plan and
that her attorney’s fees are an above-the-line Schedule C
deduction rather than an itemized deduction subject to the 2-
percent floor of section 67. These two arguments have a common
thread, that petitioner should be allowed to treat her settlement
recovery as if it were earnings from rendering services as an
independent contractor insurance agent for State Farm.
a. Deduction Disallowed for Private Pension Plan
Contributions
On October 30, 1992, petitioner adopted the Taylor J. Miller
Defined Benefit Pension Plan (TJM Pension Plan).
According to the adoption agreement, petitioner adopted and
sponsored the TJM Pension Plan as a sole proprietorship in her
own name. Petitioner did not operate a sole proprietorship
during 1992 or 1993.
The Adoption Agreement for the TJM Pension Plan selected
November 1, 1991, as the effective date and defined the term
"plan year" as the fiscal period ending on October 31 of each
calendar year.
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