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v. United States, 355 F.2d 319, 325 (9th Cir. 1966); Annabelle
Candy Co. v. Commissioner, 314 F.2d 1, 7-8 (9th Cir. 1962),
remanding T.C. Memo. 1961-170; Schulz v. Commissioner, supra at
54; Peterson Machine Tool, Inc. v. Commissioner, 79 T.C. 72, 85
(1982), affd. 84-2 USTC par. 9885, 54 AFTR 2d 84-5407 (10th Cir.
1984); Major v. Commissioner, 76 T.C. 239, 251 (1981); O'Dell &
Co. v. Commissioner, supra; Rudie v. Commissioner, 49 T.C. 131,
139 (1967); Levinson v. Commissioner, 45 T.C. 380, 389 (1966).
a. Grecco's Ability to Compete
Respondent concedes that Grecco had the physical and mental
ability to compete with petitioner. However, respondent argues
that Grecco would not have been able to take much business from
petitioner if she had competed.
We disagree. We think Grecco's past success in cofounding
petitioner shows she has the ability to compete, and that she
knows how to surround herself with the necessary personnel to
establish a successful business. We conclude that Grecco would
have been a good competitor. This factor favors petitioner.
b. Grantor's Intent to Compete
If the grantor would likely compete with the buyer, we
are more likely to sustain an allocation to the covenant.
Sonnleitner v. Commissioner, supra (among other factors, grantor
had threatened to compete). In contrast, if the grantor is
unlikely to compete with the buyer, courts are less likely to
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