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was associated with the law firm of Weiner & Millo (firm) prior
to 1998. At the firm, petitioner had a colleague, Jonathan
Tolpin (Mr. Tolpin), another attorney. Petitioner left the firm
in late 1995. Mr. Tolpin left the firm in 1997.
In 1997, petitioner referred two clients to Mr. Tolpin. The
property damage client contacted petitioner during his time at
the firm. Petitioner referred the personal injury client to Mr.
Tolpin while petitioner was in the process of closing
petitioner’s law practice.
Petitioner received $8,108 from Mr. Tolpin. This
represented petitioner’s portion of the fee from the November
1998 settlement of the property damage client’s claim.
Petitioner also received $27,681.33 from Mr. Tolpin. This
represented petitioner’s portion of the fee in the December 1998
settlement of the personal injury client’s claim. During 1998,
petitioner received a total of $35,789 (rounded) from Mr. Tolpin.
Mr. Tolpin reported the $35,789 he paid to petitioner as
nonemployee compensation on Form 1099-MISC, Miscellaneous Income.
Petitioner contended that the $35,789 “was not paid for
services performed, but for transfer of goodwill [which]
qualifies for capital gains treatment”.
Section 1401(a) imposes a self-employment tax on the self-
employment income of every individual for each taxable year.
Section 1402(b), in relevant part, defines self-employment income
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