- 22 -
Commissioner, 76 T.C. 239 (1981). Furthermore, the fact that the
Mr. Wright's right to receive $225,000 per year for consulting
was absolute and unconditional indicates that the payment was
not, in substance, for consulting services. See Coven v.
Commissioner, 66 T.C. 295, 304 (1976).
There was no meaningful evidence of the negotiations which
resulted in the allocation of the amounts set forth in the
consulting agreement. Thus, we examine events subsequent to the
execution of the agreement to determine whether the allocation
had independent economic significance. The minimal number of
consultations subsequently provided by Mr. Wright, coupled with
the paucity of evidence regarding the nature, scope, and value of
such services, indicates that the allocation of $675,000 did not
have an arguable relationship with business reality. However, we
recognize that a reasonable person in the position of the buyers
would pay some consideration for a consulting agreement with Mr.
Wright.
On this record, we find that the consulting agreement had a
value of $1,200. Consequently, only $1,200 of the amount
allocated to the consulting agreement is properly allocable
thereto. Seaboard Fin. Co. v. Commissioner, 367 F.2d 646, 652
(9th Cir. 1966); Peterson Machine Tool, Inc. v. Commissioner, 79
T.C. 72, 86 (1982), affd. 54 AFTR 2d 84-5407, 84-2 USTC par. 9885
(10th Cir. 1984); cf. Concord Control, Inc. v. Commissioner, 78
T.C. 742 (1982). Accordingly, petitioner may claim deductions
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