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sustain an allocation to the covenant not to compete. Schulz v.
Commissioner, supra (allocation to a covenant not to compete not
sustained because, in addition to other reasons, the covenantor
did not intend to compete); Major v. Commissioner, supra
(covenant had minimal value where the buyer felt he could get his
own customers and the grantor was of advanced age and had health
problems).
Respondent argues that the covenant had no value because
Grecco did not intend to compete.
Grecco said during the financial settlement negotiations
that she would compete with petitioner. She testified at the
trial of this case that in 1988 she did not intend to compete
with petitioner. However, she also testified that if she had
not received a satisfactory financial settlement, she might
have been forced to compete. Colbert testified that, without
a covenant not to compete, he thought Grecco might take a job
with a competitor, but he did not think she would start her own
business. Tiedemann testified that he was concerned that Grecco
would compete with petitioner.
These various statements of intent and expectation by
Grecco, Tiedemann, and Colbert are less persuasive as to Grecco's
intent than the objective facts. Grecco would no doubt have
continued to need to work absent her payment from petitioner, and
we expect that she would have stayed in the industry and area she
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