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agreement lacked economic significance and was in substance a
disguised payment for goodwill or going-concern value.
Petitioner argues that the consulting agreement has economic
significance, because it needed Mr. Wright's assistance in
dealing with Toyota. We recognize that Mr. Wright had extensive
knowledge and experience in dealing with Toyota, and that this
knowledge and experience would be helpful to petitioner.
Furthermore, Mr. Wright did consult with petitioner's
shareholders regarding Toyota.
Respondent argues that petitioner's shareholders would have
little, if any, need to consult with Mr. Wright. Petitioner's
shareholders had extensive experience in the domestic and
imported automobile dealership business, including experience
with a Japanese manufacturer. However, petitioner's shareholders
had no experience dealing with Toyota.
The negotiations which culminated in the creation of the
consulting agreement were conducted between Mr. Richardson and
Mr. Wright, neither of whom testified. There was evidence that
the buyers rejected the per diem portion of the proposed
consulting agreement, because, according to their counsel, it
made the consulting agreement look like a "sham".
This sparse evidence regarding the negotiation of the consulting
agreement does not indicate that the agreement had economic
substance. Schulz v. Commissioner, 294 F.2d at 54-55; Buffalo
Tool & Die Manufacturing Co. v. Commissioner, supra; Major v.
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