International Multifoods Corporation and Affiliated Companies - Page 36

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          covenant at $620,000,22 almost $200,000 less than the amount                
          allocated by petitioner in the purchase agreement with Duskin.              
          Although expert opinions can assist the Court in evaluating a               
          claim, we are not bound by the opinion of any expert and may                
          reach a decision based on our own analysis of all the evidence in           
          the record.  Helvering v. National Grocery Co., 304 U.S. 282, 295           
          (1938); Silverman v. Commissioner, 538 F.2d 927, 933 (2d Cir.               
          1976), affg. T.C. Memo. 1974-285.                                           
               Mr. Reilly computed the value of the covenant not to compete           
          under the comparative business valuation method and a discounted            
          net cash-flow analysis.  Utilizing this comparative approach, Mr.           
          Reilly computed Mister Donut's discounted net cash-flow under two           
          scenarios.  Scenario 1 assumed that the covenant was in place,              
          and petitioner could not reenter the Asian and Pacific donut                
          market.  Scenario 2 assumed that the purchaser did not receive a            
          covenant, and petitioner would reenter the market and compete.              
          Mr. Reilly attributed the difference in the sum of Mister Donut's           
          discounted net cash-flows under these two scenarios to the                  


               22Mr. Reilly's report contained the following allocation:              
          Asset                         Fair Market Value                             
          Non-compete agreement                   $620,000                            
          Trade secrets and know-how                50,000                            
          Trademarks and trade names               370,000                            
          Existing franchise agreements            200,000                            
          Goodwill                                 810,000                            
          Total                                 2,050,000                             




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