William Norwalk, Transferee, et al. - Page 12

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          accounts serviced by the corporation remained with the                      


               The principal issue underlying all these consolidated cases            
          is the fair market value of the corporation's assets on the date            
          of distribution.                                                            
          Customer-Based Intangibles                                                  

               Respondent contends that when the corporation was                      
          liquidated, it distributed to its shareholders "customer-based              
          intangibles" in addition to tangible assets.  Respondent                    
          describes the intangible assets at issue to include the                     
          corporation's client base, client records and workpapers, and               
          goodwill (including going-concern-value).  Respondent's position            
          is that these intangibles were assets of the corporation that had           
          a specific value and that when distributed to the shareholders in           
          the liquidation, triggered taxable gain to the corporation.                 
          Liability in respect of a deficiency in the corporation's tax and           
          penalty was then asserted by respondent against the shareholders            
          of the corporation as transferees.  Respondent also determined              
          that the transfer of the customer-based intangibles received by             
          the shareholders generated taxable gain to the shareholders.                
               Petitioners maintain that the corporation did not own the              
          intangibles in question.  Rather, petitioners argue that the                

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