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interests as to the allocation to the covenant. Respondent made
no argument that the difference between petitioner's payment
($513,400) and the agreed value of the stock ($189,300) was
payment for anything other than the covenant not to compete.
These facts suggest that the value of the covenant was $324,100,
the difference between the total amount petitioner paid Grecco
($513,400) and the value of the stock ($189,300).
3. Economic Reality of the Covenant Not to Compete
A value of $324,100 for the covenant is entirely supported
by the record in this case. Courts apply numerous factors in
evaluating a covenant not to compete. These include: (a) The
seller's (i.e., covenantor's) ability to compete; (b) the
seller's intent to compete; (c) the seller's economic resources;
(d) the potential damage to the buyer posed by the seller's
competition; (e) the seller's business expertise in the industry;
(f) the seller's contacts and relationships with customers,
suppliers, and other business contacts; (g) the buyer's interest
in eliminating competition; (h) the duration and geographic scope
of the covenant; and (i) the seller's intent to reside in the
same geographic area. Kalamazoo Oil Co. v. Commissioner, 693
F.2d 618 (6th Cir. 1982), affg. T.C. Memo. 1981-344; Forward
Communications Corp. v. United States, 221 Ct. Cl. 582, 608 F.2d
485, 492 (1979); Sonnleitner v. Commissioner, 598 F.2d 464, 468
(5th Cir. 1979), affg. T.C. Memo. 1976-249; Fulton Container Co.
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