- 17 -
Martin Ice Cream Co. v. Commissioner, 110 T.C. 189, 207 (1998)
("personal relationships of a shareholder-employee are not
corporate assets when the employee has no employment contract
with the corporation"); Estate of Taracido v. Commissioner, 72
T.C. 1014, 1023-1024 (1979); Cullen v. Commissioner, 14 T.C. 368,
372 (1950); MacDonald v. Commissioner, supra at 727; cf.
Schilbach v. Commissioner, T.C. Memo. 1991-556.6
We have no doubt that most, if not all, of the clients of
the corporation would have "followed" the accountant who serviced
that client if the accountant would have left the corporation.
For instance, when Mr. Tang and Ms. Hagan left the partnership
shortly after the corporation was liquidated, at least 92 clients
engaged these former employees to provide future services. On
the record here, it is reasonable to assume that the personal
ability, personality, and reputation of the individual
accountants are what the clients sought. These characteristics
did not belong to the corporation as intangible assets, since the
6In support of his position, respondent cites Schilbach v.
Commissioner, T.C. Memo. 1991-556. In Schilbach, we found that a
medical practice, operating as a corporation, had goodwill
despite the lack of a covenant not to compete. Schilbach is
distinguishable from the instant case in that in Schilbach some
of the goodwill of the medical practice was inherent in the
operating entity and was not solely dependent upon the employee-
shareholder's ability. Moreover, in Schilbach, we found it
doubtful that the employee-shareholder would have competed with
the medical practice due to his inability to obtain malpractice
insurance and his physical and mental condition. We do not find
that the same circumstances exist in the instant cases.
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