Baldarelli v. Commissioner
United States Tax Court
In 1966, S sold his partnership interest in an H & R Block franchise to B for $ 45,000 payable in four annual installments. The purchase and sale agreement included a covenant not to compete to which the parties allocated no value. Held: The noncompete covenant will not be assigned a value by this Court absent "strong proof" as to what its value might be.
Read the full summary
In 1966, S sold his partnership interest in an H & R Block franchise to B for $ 45,000 payable in four annual installments. The purchase and sale agreement included a covenant not to compete to which the parties allocated no value. Held: The noncompete covenant will not be assigned a value by this Court absent "strong proof" as to what its value might be. Therefore, S correctly reported the income he received as a long-term capital gain and B is not entitled to amortization deductions.
1Opinion of the Court
Dawson, Judge: *
In these consolidated cases the respondent determined the following Federal income tax deficiencies:
[[Image here]]
We must decide the proper treatment under sections 167 and 1221, I.R.C. 1954,1 to be given certain payments made- pursuant to a sale of a partnership interest. Eespondent initially took inconsistent positions in order to protect the revenue by denying to the buyer amortization of an alleged covenant not to compete while simultaneously denying capital gain treatment to the seller. In his brief the respondent has chosen to side with the seller.
BINDINGS OF FACT
Some of…
2Cases cited28 opinions
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Commissioner v. DanielsonCourt of Appeals for the Third Circuit · 1967
- 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
23 more not listed; retrieve them via the Exa API.
3Cited by15 opinions
- Forward Communications Corp. v. United StatesUnited States Court of Claims · 1979
- Better Beverages, Inc. v. United StatesCourt of Appeals for the Fifth Circuit · 1980
- G C Services Corp. v. CommissionerUnited States Tax Court · 1979
- Illinois Cereal Mills, Inc. v. CommissionerUnited States Tax Court · 1983
- Better Beverages, Inc. v. United States of America, S. A. Strane and Wife, Alice F. Strane, and Billy F. Strane, Individually and as Independent of the Estate of Adele Strane, Deceased v. United StatesCourt of Appeals for the Fifth Circuit · 1980
10 more not listed; retrieve them via the Exa API.