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a material income-producing factor.” Sec. 401(c)(2)(A)
(emphasis added).
Petitioner seeks to deduct her contributions to the TJM
Pension Plan on the ground that the settlement proceeds of the
State Farm class action lawsuit should be characterized as earned
income from self-employment.
Petitioner argues that the definition of net earnings from
self-employment should be broadly construed, citing Wuebker v.
Commissioner, 110 T.C. 431 (1998), particularly with regard to
insurance agents, citing Jackson v. Commissioner, 108 T.C. 130
(1997), and Schelble v. Commissioner, 130 F.3d 1388 (10th Cir.
1997), affg. T.C. Memo. 1996-269. Although Wuebker and Jackson
did not hold in favor of inclusion, Schelble did, and there are
other cases that lend support to the traditional justification
for a broad approach to promote the inclusion of self-employed
individuals in the Social Security system and to finance Social
Security benefits to be paid to them. See, e.g., Milligan v.
Commissioner, 38 F.3d 1094 (9th Cir. 1994).
In support of the application of the “origin of the claim”
test to hold that the settlement proceeds qualify as earnings
from self-employment, petitioner also cites Dye v. United States,
121 F.3d 1399, 1404 (10th Cir. 1997), which quoted the District
Court as follows:
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