Jackson v. Commissioner
United States Tax Court
P, a former insurance agent for State Farm Insurance Companies, received termination payments after his retirement on December 31, 1987, pursuant to the terms of an independent contractor Agent's Agreement.
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P, a former insurance agent for State Farm Insurance Companies, received termination payments after his retirement on December 31, 1987, pursuant to the terms of an independent contractor Agent's Agreement. Held, the termination payments P received were not "derived" from a trade or business carried on by him as an insurance agent during 1990 and 1991. Therefore, such payments are not subject to self-employment tax under sections 1401 and 1402, I.R.C., and P is not liable for such tax. Milligan v. Commissioner, 38 F.3d 1094 (9th Cir. 1994), revg. T.C. Memo. 1992-655, followed.
1DissentHalpern, J.
The majority holds that certain termination payments received by petitioner after his retirement as an independent insurance agent are not subject to self-employment tax pursuant to sections 1401 and 1402 because such payments were not “ ‘derived’ from the carrying on of petitioner’s insurance business”. Majority op. p. 140. The majority is persuaded by the reasoning of the Court of Appeals for the Ninth Circuit (the Ninth Circuit) set forth in Milligan v. Commissioner, 38 F.3d 1094 (9th Cir. 1994), revg. T.C. Memo. 1992-655. In Milligan, the Ninth Circuit recognized that, to be taxable as…
2Cases cited8 opinions
- Commissioner v. GroetzingerSupreme Court of the United States · 1987
- Newberry v. CommissionerUnited States Tax Court · 1981
- Robert P. Groetzinger v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1985
- Groetzinger v. CommissionerUnited States Tax Court · 1984
- Robert E. Milligan v. Commissioner Internal Revenue ServiceCourt of Appeals for the Ninth Circuit · 1994
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