- 17 -
petitioners sold goodwill and a going-concern to the buyers.
Respondent points out that petitioners had a good business
location and customers and that the contract for exchange
required petitioners to operate and maintain their business.
Going-concern value is the ability of a business to produce
income even though there has been a change in ownership; goodwill
is the existence of preexisting business relationships which may
be expected to continue indefinitely. Ithaca Indus., Inc. v.
Commissioner, 97 T.C. 253, 264 (1991), affd. 17 F.3d 684 (4th
Cir. 1994). Whether goodwill and going-concern value exist is a
question of fact. Id. at 263-264.
The parties did not discuss transferring or exchanging the
sand mine business. Petitioners did not transfer any customer
lists to the buyers. Petitioners did not transfer management
systems or records to the buyers. The record does not show that
petitioners had any property rights to the business name.
Petitioners did not charge the buyers for transferring rights to
use the business name. Dakic, Burke, Gilmore, and Mrs. Beeler
testified that petitioners did not transfer to the buyers
goodwill, going-concern value, or an ongoing business. The
documents conveying property from petitioners to the buyers did
not refer to goodwill or going-concern value. We conclude that
any goodwill or going-concern value transferred by petitioners to
the buyers was de minimis.
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011