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F. Farnsworth under his District Manager’s Appointment Agreement
(DMAA) with Farmers Insurance Group, and (2) whether petitioners
are liable for self-employment tax under section 14011 on the
DMAA “contract value” termination payments.
We hold that petitioners are not entitled to exclude from
income any portion of the DMAA “contract value” termination
payments because petitioners failed to prove that Mr. Farnsworth
had any basis in the DMAA contract. We further hold that the
DMAA “contract value” termination payments included in
petitioners’ income are subject to self-employment tax under
section 1401.
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
The stipulation of facts and related exhibits are incorporated by
this reference.
Petitioners were residents of Redding, California, when they
filed their petition. Petitioners are married and filed a joint
Federal income tax return, Form 1040, U.S. Individual Income Tax
Return for the taxable year 1995.
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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