16
taxpayers could not include the amount of the obligations in
computing the cost bases of the lists.
Petitioner's attempt to distinguish Wakefield v.
Commissioner, supra, is not persuasive. Petitioner contends that
it is significant the payments therein were based on a percentage
of sales, whereas her payments were to be a fixed monthly sum.
The crucial factor, however, is the same in both cases: an
obligation would only arise if commissions were earned.
We find that petitioner's liability under the agreement was
contingent, and, therefore, no amount of the obligation may be
included in computing her cost basis. Thus, petitioner has not
established that the cost basis of her interest in the customer
lists exceeded her cash payments. In her notice of deficiency,
respondent allowed petitioner deductions for the amount of the
cash payments in the taxable years in issue.3 Therefore, we need
not address respondent's argument that petitioner acquired
franchise rights.
Based on the disallowance of a portion of petitioner's
amortization deductions for tax year 1988 and 1989, and the
disallowance of such deductions in 1990 and 1991, respondent
determined that petitioner did not sustain net operating losses
in any of the years in issue. Thus, as a result of our decision
3 Respondent determined that petitioner made payments of
$15,024.58 in 1989. We find that petitioner made payments of
$16,424.58.
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