Mike, who is 67 years of age, is employed as a judge, and his terms of employment includes guaranteed employment till he is 70 years of age. A major law firm (Law Partners) approaches him and as an incentive offers him a $400,000 lump-sum (on top of an annual salary of $500,000) to resign from his role as a judge and work for them. The contract states that the $400,000 is for giving up the right to guaranteed employment as a judge. Mike accepts the offer.

After commencing employment, Law Partners gives Mike an additional $20,000 for him to agree to not provide services to a competing law firm for the duration that he is employed by Law Partners.

Required: 

Briefly explain whether the $400,000 and/or $20,000 receipts constitute ordinary income (citing authority where appropriate)