Howard Pontiac-GMC, Inc. - Page 2

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          agreement, John David Markley (Mr. Markley), the sole shareholder           
          and president of seller, terminated his Jeep-Eagle franchise with           
          Chrysler Corp. (Chrysler) and granted petitioner a covenant not             
          to compete.  Petitioner acquired the relinquished franchise from            
          Chrysler.  The sole issue for decision is whether the fair market           
          value of the covenant not to compete (sometimes referred to as              
          the covenant) is $490,000, as petitioner contends, $125,000, as             
          respondent contends, or some other amount.  All section                     
          references are to the Internal Revenue Code in effect for the               
          years in issue, and all Rule references are to the Tax Court                
          Rules of Practice and Procedure.                                            
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the attached exhibits are                      
          incorporated herein by this reference. Petitioner (sometimes                
          referred to as buyer) is a corporation whose home office and                
          principal place of business was in Oklahoma City, Oklahoma, at              
          the time it filed the petition in this case.  Petitioner filed              
          Forms 1120, U.S. Corporation Income Tax Return, for the taxable             
          years 1990 and 19911 with the Internal Revenue Service Center,              
          Austin, Texas.  Petitioner had a calender yearend.                          
          Mr. Markley's Ability to Compete                                            
               Mr. Markley entered the automobile dealership business in              
          the mid-1960's.  He purchased a Ford dealership in Yukon,                   

               1  Unless otherwise indicated, all descriptions pertain to             
          the years in issue.                                                         

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