Levinson v. Commissioner
United States Tax Court
In the written agreement of sale freely entered into between the seller and the buyers of a service business $ 142,000 of the total purchase price of $ 147,000 was allocated to a covenant not to compete, the remaining $ 5,000 being allocated $ 2,500 to the physical assets and $ 2,500 to intangible assets of the business, the $ 142,000 to be paid $ 1,000 monthly over a period of almost 12 years.
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In the written agreement of sale freely entered into between the seller and the buyers of a service business $ 142,000 of the total purchase price of $ 147,000 was allocated to a covenant not to compete, the remaining $ 5,000 being allocated $ 2,500 to the physical assets and $ 2,500 to intangible assets of the business, the $ 142,000 to be paid $ 1,000 monthly over a period of almost 12 years. Held, that the $ 1,000 monthly payments were for the covenant not to compete, deductible by the buyers and taxable as ordinary income to the seller.
1Opinion of the Court
Drennen, Judge:
In these consolidated proceedings respondent determined deficiencies in petitioners’ income taxes as follows:
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The only issue remaining for decision is whether $142,000 of the $147,000 sales price of a business sold by Benjamin Levinson (referred to herein as Levinson) to Edwin L. Howard (referred to herein as Howard) and Clyde V. MacDonald (referred to herein as MacDonald) in 1960 was paid for a covenant not to compete, as recited in the written agreement of sale, or was paid for goodwill of an established business, as contended 'by the seller. The selling price…
2Cases cited10 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
- Commissioner of Internal Revenue v. Gazette Tel. Co.Court of Appeals for the Tenth Circuit · 1954
5 more not listed; retrieve them via the Exa API.
3Cited by46 opinions
- Frank Lyon Co. v. United StatesSupreme Court of the United States · 1978
- Schmitz v. CommissionerUnited States Tax Court · 1968
- Lucas v. CommissionerUnited States Tax Court · 1972
- Hope v. CommissionerUnited States Tax Court · 1971
- Wager v. CommissionerUnited States Tax Court · 1969
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