Custom Chrome, Inc. and Subsidiaries - Page 17

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          (1960); Buffalo Tool & Die Manufacturing Co. v. Commissioner,               
          74 T.C. 441, 447-448 (1980).  Further, taxpayers generally bear             
          the burden of proving entitlement to claimed deductions.  Rule              
               Respondent argues primarily that the covenant not to compete           
          by Cruze lacks economic reality and that the $5 million paid to             
          Cruze constitutes a nondeductible capital expenditure for the               
          goodwill or going concern value of petitioner.  Respondent                  
          emphasizes that JC Investors, petitioner, and Cruze did not have            
          adverse tax interests and that the terms of the covenant were not           
          separately negotiated.  Respondent notes Cruze's testimony that             
          he would have been "pretty silly" to sell his company and then              
          spend his money trying to compete with it.                                  
               If we conclude that the covenant not to compete should be              
          respected for Federal income tax purposes, respondent argues that           
          the proper amount to be allocated to the covenant is $2.3                   
          million, not the $5 million claimed by petitioner.                          
               Petitioner argues that the covenant not to compete reflects            
          economic reality and that the entire $5 million paid to Cruze               
          with regard thereto should be respected.  Petitioner emphasizes             
          Cruze's management talents, knowledge of the industry, business             
          contacts, financial resources, and general ability to compete               
          with petitioner.                                                            

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