Donald L. Chiappetti and Mary K. Chiappetti - Page 11

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          thereunder specifically allocated $76,000 of the purchase price             
          paid by Donald C. Chiappetti to the "Covenant Not to Compete                
          executed by Dr. Donald L. Chiappetti" (emphasis added), that is             
          to say, to the agreement of petitioner, and not CPC, to refrain             
          from practicing dentistry and from soliciting its patients as               
          provided therein.  Neither that exhibit nor any other provision             
          in the purchase contract allocated $76,000 (or any other portion            
          of the purchase price) to what petitioners' claim was CPC's                 
          obligation to refrain from soliciting its patient base.  In fact,           
          there is no reference whatsoever in the purchase contract to an             
          item called a "patient base" of CPC.6                                       
               Petitioners also argue that, because the $125,000 that                 
          Donald C. Chiappetti paid under the purchase contract, including            
          the $76,000 that was allocated by that contract to the covenant             
          not to compete, was paid to CPC, and not to petitioner, the                 
          covenant not to compete was an asset of CPC.  We disagree.                  
          Regardless who received the income attributable to the covenant             
          not to compete, the true earner of that income is liable for the            
          tax on it and cannot escape that tax by assigning the income to             
          another taxpayer.  See Lucas v. Earl, 281 U.S. 111 (1930).  In              
          the instant case, petitioner in his individual capacity, and not            

          6  We note that sec. 4 of the purchase contract and exhibit A               
          attached thereto allocated $5,000 of the $125,000 purchase price            
          to an item described as "Goodwill" and $5,000 to an item de-                
          scribed as "Patient Records" in sec. 4 and as "All patient and              
          office records belonging to CPC" in exhibit A.                              




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