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Rahill agrees that the payments to be
received under paragraph (2) of this
Agreement are payments for his Covenant
Not to Compete and agrees that he will
report the payments for the Covenant
Not to Compete as “ordinary income” for
the purposes of federal income tax
reporting.
The agreement and the rights prescribed thereunder
were expressly made nonassignable by petitioner. However,
the agreement provided that Mr. Rahill contemplated
assignment of his rights under the agreement and that
petitioner approved of the assignment. After entering into
the agreement, Mr. Rahill assigned his right to receive the
payments under the agreement to the A.C. Rahill Irrevocable
Family Trust (family trust). The record does not reveal
the terms of the family trust. Petitioner made all of his
payments under the agreement to the family trust.
Petitioner prepared the family trust's income tax returns.
Petitioner paid the following amounts to Mr. Rahill's
family trust under the agreement:
Tax Year Amount Paid
1987 $7,607
1988 40,680
1989 39,519
1990 41,900
1991 31,519
Total 161,225
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Last modified: May 25, 2011