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Taxable Year Deficiencies
1992 $204,000
1993 204,420
1994 204,321
1995 153,329
The issue for consideration is whether, for purposes of section
167, the aggregate fair market value of the 5-year covenant not
to compete and the secrecy agreement is $3 million as claimed by
petitioner on its corporate Federal income tax returns.1 Unless
otherwise indicated, all section references are to the Internal
Revenue Code in effect for the years at issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
Petitioner, Lorvic Holdings, Inc., is the parent of the
Lorvic Corp. (New Lorvic), and in turn, New Lorvic is the
corporate successor to certain assets of the Lorvic Corp. (Old
Lorvic). Petitioner is a Delaware corporation, whose principal
offices are located in Earth City, Missouri. Old Lorvic was
engaged in the development, design, manufacturing, marketing,
distribution, and sale of a variety of health care products for
the professional dental market. In general, the company
1The notice of deficiency contains adjustments to
petitioner's environmental tax for the 1993, 1994, and 1995 tax
years. This adjustment is a computational adjustment which rests
on the Court's determination of the foregoing issue in this case.
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Last modified: May 25, 2011