- 19 -
or arguable relationship with business reality such that
reasonable persons, genuinely concerned with their economic
futures, might bargain for it. See Schulz v. Commissioner,
supra at 55; O'Dell & Co. v. Commissioner, 61 T.C. 461, 468
(1974); Rich Hill Ins. Agency, Inc. v. Commissioner, 58
T.C. 610, 619 (1972); McKinney v. Commissioner, T.C. Memo.
1978-448.
Client List
Petitioners' alternative argument is that the entire
amount paid to the seller, $161,225, must be allocated to
the client list acquired under the agreement. They
further argue that the client list had a useful life in
petitioner's business of 4 or 5 years. Petitioners
submitted the expert report and testimony of Dr. James
Alexander in support of their argument that the useful
life of the client list was 4 or 5 years. We note that
Dr. Alexander was not asked to place a value on the client
list. Rather, petitioners argue that no part of the amount
paid can be allocated to goodwill or the going concern
value of the business with the result that the value of
the client list must equal the amount paid by petitioner.
Dr. Alexander based his opinion that the useful life
of the client list was 4 to 5 years on the cumulative
effect of four actuarial factors that could be expected to
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