Schulz v. Commissioner
United States Tax Court
Held: Monthly payments to a retiring partner, specifically allocated in the formal agreement of partnership dissolution as consideration for his separately stated covenant not to compete, in fact reflected partnership goodwill and were a "nonseverable" portion of the consideration paid him for his capital interest in the partnership as a going business.
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Held: Monthly payments to a retiring partner, specifically allocated in the formal agreement of partnership dissolution as consideration for his separately stated covenant not to compete, in fact reflected partnership goodwill and were a "nonseverable" portion of the consideration paid him for his capital interest in the partnership as a going business. Accordingly, the payments in question were capital gain to the retiring partner and unamortizable, nondeductible capital expenditures to the continuing partners. Held, further, that the continuing partners correctly reported in their…
1Opinion of the Court
OPINION.
Raum, Judge:
1. Covenant not to compete. — The question presented requires determination of the nature of the payments ostensibly made for Landen’s covenant not to compete. Ray, John, and Klagues contend that the $18,000 was in fact paid as consideration for Landen’s covenant, having been separately negotiated for, separately stated in the dissolution agreement, and having an importance to the continuing partners over and above their acquisition of Lan-den’s interest in the partnership. Landen, on the other hand, argues that his covenant was valueless to the continuing partners. He…
2Cases cited12 opinions
- 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
- Heiner v. MellonSupreme Court of the United States · 1938
- Michaels v. CommissionerUnited States Tax Court · 1949
- Commissioner of Internal Revenue v. Gazette Tel. Co.Court of Appeals for the Tenth Circuit · 1954
7 more not listed; retrieve them via the Exa API.
3Cited by3 opinions
- Lichtman v. CommissionerUnited States Tax Court · 1964
- Schulz v. CommissionerUnited States Tax Court · 1960
- Wallach v. CommissionerUnited States Tax Court · 1982