Lucas v. Commissioner
United States Tax Court
T purchased an accounting practice from X at a stated purchase price of $ 40,000. The contract of sale contained no covenant against competition by X; and although T was interested in preventing competition by X until T had sufficient opportunity to establish himself with X's clients, the parties deliberately decided not to include any such covenant in the contract.
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T purchased an accounting practice from X at a stated purchase price of $ 40,000. The contract of sale contained no covenant against competition by X; and although T was interested in preventing competition by X until T had sufficient opportunity to establish himself with X's clients, the parties deliberately decided not to include any such covenant in the contract. X treated the proceeds of the sale as capital gain, but T attempted to treat $ 20,000 of the purchase price as a consideration for a covenant against competition, and proceeded to amortize that amount over a period of 4 years.…
1Opinion of the Court
OPINION
Baum, Judge:
The contract of sale, pursuant to which petitioner purchased Bell’s accounting practice in 1964, contained no provision for a covenant not to compete on Bell’s part in accordance with the specific agreement reached by the parties to the agreement that such a covenant would not be part of the contract. The petitioners, however, argue that such a covenant in reality existed by virtue of the interrelation of Bell’s employment contract and the contract of sale, and that $20,000 of the purchase price of the accounting practice was allocable thereto. The petitioners therefore…
2Cases cited28 opinions
- Danielson v. CommissionerUnited States Tax Court · 1965
- Ullman v. CommissionerCourt of Appeals for the Second Circuit · 1959
- Hamlin's Trust v. Commissioner of Internal Revenue. Nowel's Estate v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1954
- Schulz v. CommissionerCourt of Appeals for the Ninth Circuit · 1961
- Schmitz v. CommissionerUnited States Tax Court · 1968
23 more not listed; retrieve them via the Exa API.
3Cited by61 opinions
- Major v. CommissionerUnited States Tax Court · 1981
- Danenberg v. CommissionerUnited States Tax Court · 1979
- Peterson Machine Tool, Inc. v. CommissionerUnited States Tax Court · 1982
- Spector v. CommissionerUnited States Tax Court · 1979
- Kinney v. CommissionerUnited States Tax Court · 1972
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