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whether eligibility for payment depends on length
of service).
A review of pertinent caselaw is helpful to explain our
decision that the renewal commission payments at issue in the
present case are not exempted from self-employment tax pursuant
to section 1402(k).
Jackson v. Commissioner, supra, involved termination
payments to a State Farm agent under a contract providing for a
2-year qualification period, payments based on a fixed percentage
of the final-year’s compensation without regard to the length of
service, and a reduction for commission chargebacks on policies
canceled after termination. This Court held that the termination
payments were not subject to self-employment tax because the
payments were not tied to the “quantity or quality” of the
employee’s services. In Jackson v. Commissioner, supra at 136,
we also recognized the factual distinction identified in Schelble
v. Commissioner, 130 F.3d 1388 (10th Cir. 1997): 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.
In Lencke v. Commissioner, T.C. Memo. 1997-284, after
distinguishing the facts from those in Jackson, this Court held
that payments in lieu of renewal commissions to which an
insurance agent would otherwise be contractually entitled are
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