T.C. Memo. 2002-305
UNITED STATES TAX COURT
EDGAR L. AND JOAN H. PARKER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5732-01. Filed December 16, 2002.
P, self-employed, worked under contract as a
district manager for F, a group of insurance companies.
F canceled P’s contract and paid P an amount designated
“Contract Value”, based on the quantity (length of
service) and quality (final 6 months’ earnings) of the
services rendered by P to F. P failed to pay self-
employment tax with respect to the Contract Value,
claiming that it constituted a capital gain.
Held: The contract value is subject to the tax on
self-employment income and is not capital gain.
Robert B. Alexander, for petitioners.
Donna M. Palmer, for respondent.
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