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tax because the payments were not tied to the “quantity or
quality” of the employee’s services.
This Court in Jackson also recognized the factual
distinction identified in Schelble: where the termination
payments are tied to the quantity or quality of the taxpayer’s
prior services, the payments will be subject to self-employment
tax. Jackson v. Commissioner, supra at 136.
In Lencke v. Commissioner, T.C. Memo. 1997-284, after
distinguishing the facts from those in Milligan and Jackson, this
Court held that payments in lieu of renewal commissions to which
an insurance agent would otherwise be contractually entitled are
subject to self-employment tax because the payments retain the
character of the renewal commissions they replaced.
Congress, in section 1402(k), codified the standard
established in Milligan with respect to termination payments made
after December 31, 1997, to an “insurance salesman”. Taxpayer
Relief Act of 1997, Pub. L. 105-34, sec. 922(a), 111 Stat. 879-
880. Section 1402(k) exempts insurance salesman termination
payments from self-employment tax if, among other things, the
amount of the payments “does not depend to any extent on length
of service or overall earnings from services performed for such
company (without regard to whether eligibility for payment
depends on length of service).” Sec. 1402(k)(4)(B). The parties
agree that section 1402(k) does not apply to the case at hand,
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