- 6 - petitioners’ net income from all of the agency’s revenues, the entire amount of petitioners’ 2003 Schedule C net income is derived from premium renewals.4 Respondent references Lencke v. Commissioner, T.C. Memo. 1997-284, for the well-settled rule that self-employment income includes commission payments to a former insurance agent of previously earned commissions and asks us to find that the principles of Lencke apply to this case. It is well established that renewal commissions received by a retired insurance agent are subject to self-employment tax as a form of deferred compensation. Erickson v. Commissioner, 1 F.3d 1231 (1st Cir. 1993), affg. without published opinion T.C. Memo. 1992-585; Jackson v. Commissioner, 108 T.C. 130, 133-135 (1997); sec. 1.1402(a)-1(c), Income Tax Regs. However, income must arise from some actual (whether present, past, or future) income- producing activity of the taxpayer before it becomes subject to self-employment tax. Newberry v. Commissioner, supra at 446. Earnings from past income-producing activities must be tied to the quantity or quality of the taxpayer’s prior labor. Schelble v. Commissioner, 130 F.3d 1388 (10th Cir. 1997), affg. T.C. Memo. 1996-269. Although Mr. Edwards and Ms. Payne testified that Mr. Edwards did not sell insurance in 2003 and had been retired from 4 Petitioners’ net income from the Edwards agency in 2003 was $62,483, whereas the agency’s gross receipts from renewals were $154,179.Page: Previous 1 2 3 4 5 6 7 8 9 NextLast modified: March 27, 2008