Payne v. Commissioner
United States Tax Court
Petitioners, and another shareholder, sold all the capital stock of a newspaper for $ 383,572.26. Two contracts of sale were introduced into evidence, alike in all respects except that one allocated $ 100,000 of the total consideration to a paragraph containing a covenant by the sellers not to compete for a 10-year period. Held, on the facts, the total consideration was paid for the capital stock of the newspaper.
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Petitioners, and another shareholder, sold all the capital stock of a newspaper for $ 383,572.26. Two contracts of sale were introduced into evidence, alike in all respects except that one allocated $ 100,000 of the total consideration to a paragraph containing a covenant by the sellers not to compete for a 10-year period. Held, on the facts, the total consideration was paid for the capital stock of the newspaper. The value of the covenant was not bargained for, and it was incidental to the transfer of the newspaper's goodwill.
1Opinion of the Court
OPINION.
Rice, Judge:
The sole issue for our consideration is purely a factual one; namely, whether the petitioners and the coowner of their newspaper sold a covenant not to compete for $100,000 at the time they sold their newspaper. The respondent contends that they did and that, consequently, petitioners should have treated the allocable shares of the $100,000 as ordinary income rather than as capital gains. Petitioners claim that the $100,000 in issue was merely part of the purchase price of the newspaper stock and that the covenant alone was worthless. They argue that any contract or papers…
2Cases cited8 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Hamlin's Trust v. Commissioner of Internal Revenue. Nowel's Estate v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1954
- Michaels v. CommissionerUnited States Tax Court · 1949
- Commissioner of Internal Revenue v. Gazette Tel. Co.Court of Appeals for the Tenth Circuit · 1954
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3Cited by28 opinions
- Thrifiticheck Service Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1961
- Lemery v. CommissionerUnited States Tax Court · 1969
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- Berry Petroleum Co. v. CommissionerUnited States Tax Court · 1995
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