This section contains the nature of the case and procedural background.

Olmsted (D) is an Iowa corporation and the exclusive general agent for Peoples Life Insurance Company. In 1956, Peoples wanted to terminate its exclusive relationship with D in order to divide the state into smaller territories. The president of D was in failing health, and he entered into a new agreement with the old agreement being canceled on December 31, 1955. Under the new agreement, D assigned to Peoples all of its rights to renewal commissions earned and payable after January 1, 1956. D and its three stockholders agreed not to sell life insurance for any other companies other than Peoples. D also agreed to turn over all documents and records of its business for the payment of an annuity of $500 per month for 180 months. Peoples also agreed to pay the agents employed by D any renewal commissions as might be due under their contracts with D. In 1956, D reported $5,500 as the total payments received under the new contract. The Commissioner determined that the fair market value was $69,924.47 and D owed $27,009.34. The Tax Court disagreed; the assignment of a right to future renewal commissions did not constitute a sale.

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