Dodson v. Commissioner
United States Tax Court
Finance company sold all of its assets under written agreements which provided that $ 37,000 of the total purchase price of $ 187,200 was allocated to covenants not to compete.
Read the full summary
Finance company sold all of its assets under written agreements which provided that $ 37,000 of the total purchase price of $ 187,200 was allocated to covenants not to compete. Seller contends that said agreements were a nullity because its corporate resolution was in fact a prior written contract of sale with no covenant; because said resolution did not authorize sales to the buyers who in fact acquired; and (alternatively) because the written agreements were procured by fraud so that covenants were not in fact sold. Seller concedes that its reserve for bad debts is includable in income in…
1Opinion of the Court
OPINION
In 1964 Radford Finance Co. simultaneously sold all of its assets to the two Piedmont corporations in separate transactions and subsequently liquidated under section 3373 of the Code. Respondent has determined that when the assets were sold Radford realized ordinary income derived from the receipt of cash for a covenant not to compete on the part of Radford and its president and general manager, John Dodson. Respondent also determined that when Radford sold its outstanding notes receivable, its need for a reserve for its bad debts account terminated and it had ordinary income in the…
2Cases cited16 opinions
- Danielson v. CommissionerUnited States Tax Court · 1965
- Schmitz v. CommissionerUnited States Tax Court · 1968
- Horner v. AhernSupreme Court of Virginia · 1967
- Emmette L. Barran and Martha Barran v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1964
- General Insurance Agency, Inc. v. Commissioner of Internal Revenue, Commissioner of Internal Revenue v. Helen R. ThrockmortonCourt of Appeals for the Fourth Circuit · 1968
11 more not listed; retrieve them via the Exa API.
3Cited by13 opinions
- Lucas v. CommissionerUnited States Tax Court · 1972
- Kinney v. CommissionerUnited States Tax Court · 1972
- Morrison v. CommissionerUnited States Tax Court · 1972
- Brooks v. CommissionerUnited States Tax Court · 1974
- Feller v. CommissionerUnited States Tax Court · 1983
8 more not listed; retrieve them via the Exa API.