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In Danielson, the court bound the taxpayer to the terms of
an agreement for the sale of his business that allocated a
specific portion of the sales price to a covenant not to compete.
Commissioner v. Danielson, supra at 778. Courts, however, have
applied the Danielson rule beyond the confines of allocations of
payments to a covenant not to compete. E.g., Schatten v. United
States, supra at 321-322 (6th Cir. 1984) (per curiam) (whether
payments from taxpayer's ex-husband were for property settlement
or alimony); Bradley v. United States, 730 F.2d 718, 720 (11th
Cir. 1984) (whether funds received from real property purchaser
were interest income or payments on a continuing option); Spector
v. Commissioner, 641 F.2d 376, 382 (5th Cir. 1981), revg. 71 T.C.
1017 (1979) (whether transaction in which taxpayer surrendered
his partnership interest in an accounting firm was a sale or a
liquidation); Coleman v. Commissioner, supra at 202 (whether the
taxpayers had a depreciable interest in certain computer
equipment involved in computer leasing arrangements).
In refusing to permit the taxpayer to disavow the
allocations specified in the contract, the court in Danielson
stated that the policy considerations for the rule were the
desire to avoid a unilateral reformation of a contract which
could lead to possible unjust enrichment of one of the parties to
the contract; a concern for predictability in allocating the tax
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