Curtis Bedford, age 73, is a professor of English at a private university. He holds a tenured position, which represents a lifetime employment contract. The university has offered Curtis a $75,000 lump-sum payment if he will retire from the faculty. If Curtis accepts the payment, he must give up any legal claim against the university for age discrimination and must forfeit all of his privileges as a faculty member. If Curtis accepts the university’s offer, will the $75,000 payment represent compensation that is subject to employer and employee payroll (Social Security and Medicare) tax?
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