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Missouri, Kansas, Illinois, Tennessee, Mississippi, Wyoming,
Colorado, New Mexico or Utah" for the 3-year period commencing
November 1, 1987. No one other than Beaurline and Holliday was
offered a noncompete agreement.
Also on October 29, 1987, State Supply executed employment
agreements with Beaurline and Holliday. Under the employment
agreements, neither Beaurline nor Holliday had the authority or
responsibility without prior approval of the board of directors
to hire or fire employees, determine employee compensation, or
make capital expenditures. The employment agreements could be
terminated without cause by State Supply, and specifically
acknowledged the existence of the noncompete agreements. The
employment agreements provided that:
The Employee shall devote his entire time, attention
and energies to the Employer's business and shall not
during the term [one year] of his employment be engaged
in any other business activity whether or not such
business activity is pursued for gain, profit, or other
pecuniary advantage. * * *
State Supply's Deductions for Amortization of Noncompete
Agreements
State Supply, on its U.S. Income Tax Return for an S
Corporation (Forms 1120S), claimed amortization deductions for
the noncompete agreements as follows:
Taxable Year Deduction Claimed
1987 $166,667
1988 958,333
1989 673,560
1990 548,560
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