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There are no facts in the record that indicate that there
was an employment contract between petitioner and the employees
who worked for the agency or that the successor agent was
required to hire the employees. Petitioner did not argue, and we
do not conclude, that the employees constitute capital assets in
the hands of petitioner. There is nothing in the record that
indicates that petitioner received any portion of the termination
payment as payment for the successor agent’s hiring of the
employees. The fact that the successor agent hired petitioner’s
former employees does not support petitioner’s argument that he
sold his agency.
Petitioner may have taught the successor agent about the
agency and introduced him to policyholders when the successor
agent visited petitioner’s office, but there are no facts in the
record that indicate that petitioner received the termination
payment as payment for teaching the successor agent about the
agency and introducing him to policyholders.
We conclude that petitioner did not own a capital asset that
he could sell to State Farm. He did not receive the termination
payment as payment for any asset. Accordingly, the termination
payment does not represent gain from the sale or exchange of a
capital asset.
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