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nonamortizable goodwill or going-concern value. Petitioner
asserts that such deductions are allowable.
In general, goodwill has been defined as the expectancy that
old customers will resort to the old place of business. Newark
Morning Ledger Co. v. United States, 507 U.S. ___, ___, 113 S.
Ct. 1670, 1675-1676 (1993); Metallics Recycling Co. v.
Commissioner, 79 T.C. 730, 742 (1982), affd. 732 F.2d 523 (6th
Cir. 1984). Going-concern value is similar to goodwill in that
it reflects "the additional element of value which attaches to
property by reason of its existence as an integral part of a
going concern." VGS Corp. v. Commissioner, 68 T.C. 563, 591
(1977).
Amounts paid by a buyer for goodwill or going-concern value
yield capital gain to the seller with the buyer acquiring an
intangible asset that may not be amortized. Throndson v.
Commissioner, 457 F.2d 1022, 1024 (9th Cir. 1972), affg. Schmitz
v. Commissioner, 51 T.C. 306 (1968); Computing & Software, Inc.
v. Commissioner, 64 T.C. 223, 232 (1975); sec. 1.167(a)-3, Income
Tax Regs.3 On the other hand, amounts paid by a corporation for
services, including consulting fees, are includable as ordinary
income by the service provider and deductible by the corporation.
Secs. 162(a)(1), 61; Ruge v. Commissioner, 26 T.C. 138, 143
3 Compare sec. 197, enacted as part of the Omnibus Budget Reconciliation
Act of 1993, Pub. L. 103-66, sec. 13261(a), 107 Stat. 312, 553, which allows
for 15-year amortization of acquired intangible assets, including, inter alia,
goodwill and going-concern value. Sec. 197. This provision generally applies
to intangibles acquired after Aug. 10, 1993.
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