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accounts serviced by the corporation remained with the
partnership.
OPINION
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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