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or goodwill. Respondent also suggests that the termination
payment is in the nature of income from self-employment, but
hedges that position in arguing that the payment is “similar to
an annuity” and a “retirement benefit”. We note that respondent
did not determine that petitioners were liable for self-
employment tax with respect to the termination payment.
Petitioners argue that the termination payment was for the
sale or buyout of a business resulting in capital gain. They
assert that petitioner developed a customer base and the
termination payment was designed to protect the existing customer
base for the successor agent as well as compensate petitioner for
the goodwill and going business concern he developed.
Petitioners rely on the concurring opinion in Jackson v.
Commissioner, 108 T.C. 130, 141 (1997), which characterizes a
termination payment similar to the one at issue as a buyout of
the taxpayer’s business.
The Coalition of Exclusive Agent Associations, Inc. (CEAA),
filed with leave of the Court an amicus brief pursuant to
conditions specified in the Court’s order. The CEAA’s argument
is similar to the arguments made by petitioners: State Farm
purchased the goodwill generated by petitioner; therefore,
petitioner is entitled to capital gain treatment.
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