Brooks v. Commissioner
United States Tax Court
Brooks sold a clinical orthodontic practice to Bloch for $ 240,000 payable at the rate of $ 1,000 per month for 20 years. Brooks considered $ 10,000 of this amount as payment for the tangible assets of the practice and the remainder as payment for the sale of goodwill. Accordingly, he treated $ 5,749.80 of the $ 6,000 he received in 1955 and $ 11,499.60 of the $ 12,000 he received in 1956 as gain from the sale of a capital asset on his income tax returns for those years.
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Brooks sold a clinical orthodontic practice to Bloch for $ 240,000 payable at the rate of $ 1,000 per month for 20 years. Brooks considered $ 10,000 of this amount as payment for the tangible assets of the practice and the remainder as payment for the sale of goodwill. Accordingly, he treated $ 5,749.80 of the $ 6,000 he received in 1955 and $ 11,499.60 of the $ 12,000 he received in 1956 as gain from the sale of a capital asset on his income tax returns for those years. The Commissioner determined deficiencies based on the treatment of these amounts as ordinary income derived from a covenant…
1Opinion of the Court
Mulroney, Judge:
The respondent determined deficiencies in petitioners’ income tax of $8,392.85 for 1955 and $5,399.98 for 1956. The sole question for decision is whether a portion of the purchase price received for the sale of a dental practice is the proceeds from the sale of goodwill or consideration for a covenant not to compete.
BINDINGS OF FACT.
Petitioners Merle P. and Vera Brooks are husband and wife and reside in Los Angeles, California. They filed joint income tax returns for the years 1955 and 1956 with the district director of internal revenue at Los Angeles.
Brooks has practiced as a…
Also in this document: Dissent.
2Cases cited7 opinions
- United States v. DavisSupreme Court of the United States · 1962
- Michaels v. CommissionerUnited States Tax Court · 1949
- In Re the Accounting of BrownNew York Court of Appeals · 1926
- Horton v. CommissionerUnited States Tax Court · 1949
- Watson v. CommissionerUnited States Tax Court · 1960
2 more not listed; retrieve them via the Exa API.
3Cited by46 opinions
- Commissioner of Internal Revenue v. Seaboard Finance Company, Seaboard Finance Company, Cross v. Commissioner of Internal Revenue, CrossCourt of Appeals for the Ninth Circuit · 1966
- Harold B. Schwartz and Eric Rosenbaum v. Nms Industries, Inc.Court of Appeals for the Fifth Circuit · 1978
- Kenney v. CommissionerUnited States Tax Court · 1962
- Solitron Devices, Inc. v. CommissionerUnited States Tax Court · 1983
- Karan v. CommissionerCourt of Appeals for the Seventh Circuit · 1963
41 more not listed; retrieve them via the Exa API.