15
that the fair market value of the rights acquired by petitioner
and claimed by her as a cost basis was equal to $588,019.52, the
total amount which was to be withheld from her commissions
according to the agreement. Moreover, the withholdings were
contingent on her success in earning commissions. She has failed
to establish that any amount approximating the $588,019.52 was
likely to be paid.
Further, the material facts in this case are virtually
identical to the facts present in Wakefield v. Commissioner, T.C.
Memo. 1995-318. In that case, the taxpayers as Safeguard
distributors claimed deductions for amortization with respect to
certain customer lists acquired in connection with their
distributorships. The taxpayers did not make any cash payments
when they signed their distributorship agreements. Safeguard was
to withhold 30 percent of the taxpayers' commissions on the sale
of Safeguard products to be applied against the purchase price of
customer lists. The taxpayers were not liable for any payments
once they ceased to be Safeguard distributors. The Court found
that the taxpayers' obligations were nonrecourse and contingent
on their success in earning commissions. Id. In addition, the
Court found that the taxpayers had not established that the fair
market value of the lists was equal to their stated purchase
price, nor had they established that payment of the obligations
was likely. Id. Therefore, the Court concluded that the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011