Professor Rodney Taylor and the university he works for have been negotiating an early retirement package and have reached a stumbling block. Under the agreement, Professor Taylor is to receive a lump$-$sum payment equal to one year$$s salary in exchange for his retirement and the release of any and all rights associated with his tenure status. While recognizing that the payment would be subject to income tax, Taylor contends that the amount is not earned income and thus should not be subject to the FICA tax. The university negotiators say that they are not aware any authority that supports Taylor$$s view. In fact, they have learned that other universities in the state system have been withholding amounts for FICA for years in situations involving early retirement buyout packages for high$-$level administrators. The university$$s position is that lacking the authority to not withhold for FICA and given the precedent set in similar early retirement packages at other universities, they are obligated to withhold FICA from the payment. Obviously, if the payments are considered wages subject to the FICA tax, the value of the offer to Professor Taylor will be significantly reduced. The university negotiators, in an effort to break the stalemate, have made a bold proposal to Professor Taylor. They have given him two weeks to come with any legal authority that supports his position. If he is successful they will not only, not withhold FICA payments from his lump$-$sum payment, but also increase the university$$s offer to one and half year$$s salary. If he is unsuccessful after two weeks he must accept the offer as presented $($one year$$s salary $$ less FICA withholding$).$ The university puts this offer in writing and both sign.

Please answer the follwoing question in a tax memo format $($with facts, issue, authorities, conclusion, analysis$).$

$$ Cite one court case with a similar fact pattern.

$$ Summarize arguments presented by both sides.

$$ Identify and summarize legal authorities the court considered.

$$ Identify authorities the court accepted and which they rejected.

$$ What action did the IRS take as a result of the court$$s decision?

$$ What did the IRS do as a result of its conflicting revenue rulings?

Thank you!