Import Specialties, Inc. v. Commissioner
United States Tax Court
In 1971, Old Import, a corporation engaged in the wholesale costume jewelry business, sold its assets to Import Specialties. At the same time, two key employees of Old Import entered into employment contracts and covenants not to compete with Import Specialties.
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In 1971, Old Import, a corporation engaged in the wholesale costume jewelry business, sold its assets to Import Specialties. At the same time, two key employees of Old Import entered into employment contracts and covenants not to compete with Import Specialties. Held, the payments made by Import Specialties to the two employees did not constitute disguised payments for the goodwill of Old Import and therefore are deductible as compensation and as the amortized cost of covenants not to compete. Held further, Import Specialties improperly reduced its inventories under the lower of cost or…
1Opinion of the Court
IMPORT SPECIALTIES, INC. (NOW KNOWN AS IMPORT LIMITED), ET AL., 1 Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Import Specialties, Inc. v. Commissioner
Docket Nos. 12890-78, 12971-78, 12972-78, 12973-78
United States Tax Court
T.C. Memo 1982-41; 1982 Tax Ct. Memo LEXIS 708; 43 T.C.M. (CCH) 411; T.C.M. (RIA) 82041;
January 29, 1982.
In 1971, Old Import, a corporation engaged in the wholesale costume jewelry business, sold its assets to Import Specialties. At the same time, two key employees of Old Import entered into employment contracts and covenants not to compete with Import…
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