Horton v. Commissioner
United States Tax Court
Sale by sole proprietor of an accounting business, including files showing who were the clients of the business, copies of audit records and work papers for the clients, and good will, accompanied by an agreement not to compete for a period of six years, held to result in capital gain to the extent that the payments were made for good will; held, further, that the part of the payments allocable to the covenant not to compete is taxable as ordinary income.
1Opinion of the Court
OPINION.
Black, Judge:
We have but one issue in these proceedings, and that is whether payments received by the petitioners in the years 1942 and 1943 pursuant to the terms of a contract of October 1,1941, constitute ordinary income, as the Commissioner has determined, or capital gain resulting from the sale of good will, as the petitioners contend. Section 29.22 (a)-10, Regulations 111, relating to the sale of good will, is printed in the margin.1 There is no issue as to the amount of income received under the contract and petitioners concede that the payments had no cost basis.
The contract of…
2Cases cited4 opinions
- Michaels v. CommissionerUnited States Tax Court · 1949
- Toledo Newspaper Co. v. CommissionerUnited States Tax Court · 1943
- Washburn v. National Wall-Paper Co.Court of Appeals for the Second Circuit · 1897
- See v. HeppenheimerNew Jersey Court of Chancery · 1905
3Cited by77 opinions
- Hamlin's Trust v. Commissioner of Internal Revenue. Nowel's Estate v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1954
- Schmitz v. CommissionerUnited States Tax Court · 1968
- Gazette Tel. Co. v. CommissionerUnited States Tax Court · 1953
- Brooks v. CommissionerUnited States Tax Court · 1961
- Kenney v. CommissionerUnited States Tax Court · 1962
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